Hagstrom opens by situating Buffett's investment philosophy against the backdrop of academic efficient market theory — which holds that stock prices already reflect all available information — arguing that Buffett's decades of market-beating returns represent strong practical evidence against strict versions of that theory.

Key framing Hagstrom establishes:

• Efficient market theory suggests it should be effectively impossible to consistently outperform the market through stock selection, yet Buffett's long-term track record presents a persistent challenge to this view
• Hagstrom argues Buffett succeeds specifically by treating stocks as ownership stakes in real businesses, deeply analyzing business fundamentals, rather than treating price movements as inherently unpredictable noise
• This framing sets up the book's central purpose: to extract Buffett's specific, teachable business-evaluation criteria from his public letters and interviews into a systematic framework

This opening positions the rest of the book as a practical, business-analysis-based alternative to purely statistical or trend-based investing approaches.