The Warren E. Buffett approach to invest is deceptively simple.
“Forget what you know, about the purchase of fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices,” he once wrote to shareholders or Berkshire Hathaway, their commercial conglomeration.
This method, known as value investment, had existed long before Mr. Buffett, now 94 years old, begs his career. But nobody did so well, or for so long, as he did. And in the process, Hey influenced generations of financial, including the magnates of the Wall Street coverage funds, and promoted the now common council on long -term investment.
Around the 60 years that Mr. Buffet has controlled Berkshire Hathaway, the value used to convert a textile manufacturer that fails into a conglomerate of $ 1.1 billion, a corporate acquisition machine and a microcosm of the United States economy. One of the largest railroads in the United States? Berkshire property. The largest shareholder of American Express and Coca-Cola? Berkshire too.
Mr. Buffett accumulated a personal fortune similar to Midas, valued at around $ 168 billion, and on the road it became the avunular avatar of American capitalism that was requested for both corporate executives and the government.
That incomparable success won Mr. Buffett million or fans around the world. Tens of thousands of them were present at the annual Berkshire meeting in Omaha on Saturday when he declared that he finally planned to resign as executive director.
His announcement was received with surprise and then minutes of thunderous applause from the shareholders, many of whom became millionaires when they were owners of Berkshire shares and clinging to all their financial aphorism.
“I tell people everything I know about investing that I learned from Warren Buffett,” said Bill Ackman, the multimillionaire coverage fund manager who was in the crowd, in an interview after Mr. Buffet’s announcement.
Mr. Buffett has recognized that his enormous fortune should not debt with pure luck. As he said, he won “the ovarian lottery” at birth in the United States, when the stock markets were prepared to create one of the greatest economic booms in modern history.
He learned about the storage of a pioneer of value investment, Benjamin Graham, who was his professor at Columbia University. With a crucial advice by Charles T. Muger, a fellow Nebraskan who became his lifelong commercial partner, Buffett turned Berkshire, who bought with control or in 1965, with the most possible argument for the discipline.
But few lived and breathed discipline like him, reading corporate balances for research, and fun, from dawn to dusk.
Mr. Buffett then made this knowledge work in several ways. Berkshire bought a wide range of successful businesses, including See’s Candy, Fruit of the Loom and private jet service netjets. But the most transformatives were the acquisitions of insurers such as National Indemnity and Geico, who sat on premiums who pay the client but had still claimed.
That cash, known as “Float”, became the first financial engine of Mr. Buffet’s offers. He used that money, together with the profits of the company’s other businesses, to buy what is now a collection of 189 companies. Among the largest are the BNSF railway, acquired in 2010 for approximately $ 26 billion; and the electricity producer Berkshire Hathaway Energy, bought in 2000 for $ 2 billion that then expanded through their own acquisitions.
As of March 31, that cash stack, which Mr. Buffett called his “elephant gun”, was almost $ 348 billion.
Those who have sat in front of Mr. Buffett in negotiating tables over the years have said he is friendly and polite, but unwavering when it comes to numbers. When it is involved, the waterfront rounds on the price are not on the cards; You are ready to get away.
“Warren is the most disciplined investor and the clearest thinker I have met,” said Byron Trott of the Merchant BDT & MSD bank, who, like Goldman Sachs Dealker, became one of the few bankers that Buffett said he trusted. “Its ability to distill the complexity in clarity and lead with humility and conviction, has no comparison.”
Mr. Buffett also used Berkshire’s cash to buy a variety of shares, with a portfolio that includes American Express, Bank of America, Coke, Chevron and, in one of its most profitable investments: Apple. For those companies, Berkshire’s property has tended to be the equivalent of a good approach seal.
And with the enormous balance of Berkshire and the incomparable control of Mr. Buffett, the conglomano has been able to rush into the appropriate times, buying when others must sell.
Mr. Buffett has been “an extraordinary investor in American Express and a personal friend for me,” said Stephen Squeri, executive director of American Express, after Berkshire’s announcement.
Another key to its success was to maintain investments for centuries: “Our favorite period of possession is forever,” he said, letting the returns again and again, a process that has been compared with a snow ball rolling downhill. (A biography with which Mr. Buffett cooperated, but then criticized, bears the name of the phenomenon).
Berkshire’s other advantage for his investors is that he does not charge rates, unlike mutual funds or coverage funds. In fact, Mr. Buffet has criticized the size of the rates charged by Wall Street vehicles.
That said, Mr. Buffet admitted that he made many mistakes over the years. One of them was to pass opportunities to invest early in technological giants such as Amazon and Microsoft, whose businesses said he did not understand at that time.
Even so, despite several low performance periods, especially in recent years, Mr. Buffett’s history is amazing. According to his calculations, Berkshire won 5,502,284 percent from 1964 to 2024, compared to S&P 500s 39,054 percent during the same period. Its average annual gain was 19.9 percent, while the S&S PS was 10.4 percent.
Mr. Buffet’s approach has inspired countless other financial ones, including Mr. ACKMAN and Mogul Mario Gabelli of the Mutual Fund. (Others have tried to copy it more directly, including Sardar Biglari, whose financial vehicle, Biglarari Holdings, shares the Berkshire initials, the website design and the investment approach).
However, Mr. Buffett transcended business renown and reached real celebrities, resorting to a popular person from Nebraska who prevented the usual ornaments of plutocratic wealth. Fans have made pilgrimage to their home for a long time in Omaha and favor their preferences for conventional products such as Cherry Coke, Dairy Queen Blizzards and See’s Fudge. (Everyone, in particular, are associated with Berkshire).
Hello, it also became known in pop culture, through cameos appearances in television programs that include “All My Children” and “The Office”.
He made fun of what he saw as the failure of the business world and Wall Street, in particular, regularly ridiculing the professional corridors and merchants for converting the markets into a “game room” that could attract the average to financial ruin.
He took a more serious position against the excesses of Wall Street in 1991 when a large shareholder from Salomon Brothers, was forced to rescue the investment bank after a commercial scandal. It was a low moment in Mr. Buffett’s career.
Call to testify to the Congress on Salomon, Mr. Buffett delivered a steel message to the firm’s employees: “Losing money for the company, and would understand; will lose a reputation trampling for the company, and I will be ruthless.”
His fame also gave him a unique influence in Washington, adding weight to his pronouncements on political and fiscal issues. Mr. Ackman said the policy formulators also closely followed the comments of Mr. Buffett and the annual letters, and acted in their ideas such as treating the options on actions for executives such as a corporate expense.
He thought that a Democrat who supported Hillary Clinton for president and whose name honored a proposal of the Obama era for higher taxes on the rich, Buffett advised the presidents of both parties. That was more visible in 2008, when it was begged by corporate executives and the George W. Bush administration to help the global financial system to melt.
Mr. Buffett potentially arose to invest billions in Goldman Sachs and General Electric, moves Mr. ACKMAN compared to JP Morgan’s efforts to save banks at the beginning of the 20th century. However, it is faithful to the form, it charged both companies an interest rate of 10 percent Athronomic, the executives of a load have said they were selling to pay to win their printed and survive.
“Warren Buffett represents all the good of US capitalism and the United States in itself,” said Jamie Dimon, executive director of JPMorgan Chase, after Saturday’s announcement.
While Berkshire’s future seems financially solid, with Mr. ACKman by calling the company “La Roca de Gibraltar”, Buffett’s followers for a long time say they may not keep his apparently mythical state without the main architect.
The next executive director of Berkshire, Gregory Abel, is considered an excellent business operator and an intelligent merchant, and Mr. Buffett hired Todd Combs and Ted Weschler as high -level investment executives more than a decade ago.
For Lawrence Cunningham, director of the Weinberg Corporate Governance Center at the University of Delaware and a shareholder, Mr. Buffett “has given Berkshire the best possible opportunity for the next chapter.”
But other investors are concerned that the company becomes a little less special and win around the selection of shares that put it on the map. Bill Smead, whose investment firm has Berkshire’s actions and attended this year’s annual meeting, said the conglomerate has already become less ambitious, avoiding power transformative agreements.
“It’s the end of an era,” said Smead.
