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Warren Buffett

Chairman and CEO of Berkshire Hathaway, the world's most successful value investor with a net worth exceeding $100 billion.

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Warren Buffett

Summary

Warren Edward Buffett (born August 30, 1930) is the chairman and CEO of berkshire-hathaway and widely regarded as the most successful investor in history. His investment approach combines Graham's original margin-of-safety principle with Charlie Munger's emphasis on buying wonderful businesses at fair prices. His net worth exceeds $100 billion, all of which is being given away through the Giving Pledge.

Core Philosophy

1. Intrinsic Value

"Intrinsic value is the discounted value of the cash that can be taken out of a business during its remaining life."

Buffett calculates intrinsic value using owner earnings rather than GAAP earnings, factoring in depreciation and capital expenditures. The key is compounding — holding great businesses for long periods allows gains to compound tax-deferred.

2. The Moat

"The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company, and above all, the durability of that advantage."

Buffett learned from Munger that buying businesses with wide moats at fair prices outperforms buying mediocre businesses at cheap prices. The moat is the durable competitive advantage that keeps competitors at bay for decades.

3. Mr. Market

"Be fearful when others are greedy, and greedy when others are fearful."

Derived from Graham's allegory of mr-market, Buffett uses market volatility as an opportunity. When prices are depressed, quality businesses become available at margin-of-safety prices.

4. Circle of Competence

"Know your circle of competence."

Buffett only invests in businesses he understands deeply. This means knowing what you know and being honest about what you don't know.

Investment Evolution

Phase 1: Cigar-Butts (1950s-1960s)

Buffett initially followed Graham's approach of buying mediocre businesses at very cheap prices. This "cigar-butt" investing worked but required constant work.

Phase 2: Wonderful Businesses (1970s-present)

After meeting Munger, Buffett shifted to buying high-quality businesses at reasonable prices. This is the approach that built the modern Berkshire.

Berkshire Hathaway

Founded in 1839 as a textile company, Berkshire became Buffett's investment vehicle after he acquired it in the 1960s. Today it operates two major businesses:

  1. Insurance Operations — Including geico and General Re
  2. Wholly-Owned Businesses — BNSF, MidAmerican, See's

The float (premiums collected but not yet paid out) from insurance operations has been Berkshire's secret weapon — cheap capital deployed into investments.

Famous Quotes

  • "Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1."
  • "Be greedy when others are fearful, and fearful when others are greedy."
  • "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
  • "The most important investment you can make is in yourself."
  • "Time is the friend of the wonderful business, the enemy of the mediocre."
  • "A horse is worth more alive than as a horseburger."

Key Holdings (2025)

Company Stake Business
apple ~5.5% Technology
bank-of-america Major Banking
american-express Major Financial Services
Chevron Major Energy
Kraft Heinz Major Consumer Goods

Succession

Buffett has designated Greg Abel as his successor as CEO of Berkshire Hathaway. Abel currently runs Berkshire's non-insurance operations and is known for his operational excellence and similar long-term thinking.

Letters & Communications

Buffett Partnership Letters (1957-1970)

Before Berkshire Hathaway, Buffett ran a successful investment partnership. These early letters document the foundation of his investment philosophy.

Berkshire Hathaway Shareholder Letters (1971-Present)

Annual letters to shareholders documenting Berkshire's progress, philosophy, and lessons learned.

  • letters — Complete index of shareholder letters

1970s:

  • letter-1979 — Investor's Misery Index: inflation + taxes = zero real gains
  • letter-1978 — Diversified Retailing merger, concentrated investing
  • letter-1977 — ROE as proper measure, insurance excellence
  • letter-1976 — Recovery: 17.3% ROE, National Indemnity 115→98.7 combined ratio
  • letter-1975 — Worst industry year ever: 7.6% ROE, V-shaped textile recovery
  • letter-1974 — Worst ROE (10.3%), insurance crisis, Florida failure
  • letter-1973 — 17.4% ROE, Jack Ringwalt retirement, $12M stock losses
  • letter-1972 — Record 19.8% ROE, insurance paradox explained
  • letter-1971 — 14% ROE, Home-State expansion, Home & Auto acquisition
  • letter-1970 — Transition year, textile struggle

1980s-2000s:

2020s:

Interviews & Speeches

  • munger-acquired — Acquired Podcast: Berkshire Partnership and Costco History

Further Reading

  • Shareholder Letters (1957-present): berkshirehathaway.com/letters
  • The Essays of Warren Buffett by Lawrence Cunningham
  • Snowball by Alice Schroeder (authorized biography)
  • Tap Dancing to Work by Carol Loomis

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