Warren BuffettCopy Anchor Link

Warren BuffettCopy Anchor Link

Warren Buffett is the longtime chairman and CEO of berkshire-hathaway, which he has run since 1965, and before that managed the Buffett Partnership (1956–1969). His own accounts in the shareholder letters trace the arc of his investment philosophy from a Graham-style bargain hunter into a buyer of high-quality businesses.

Buffett's formation began with benjamin-graham. He attended Graham's class at Columbia in 1951, where a single stock idea "giving me a $10,000 gain improved my investment performance for the year" by a full 100 percentage points. That same year a conversation with Lorimer Davidson convinced him GEICO was a terrific business, and he put 65% of his then-$9,800 net worth into the stock. He has called reading Chapter Eight of Graham's The Intelligent Investor — on how to view price fluctuations — "one of the luckiest moments in my life", after which "low prices became my friend."

For most of his early career Buffett practiced what he later named the cigar-butt approach: buying mediocre businesses at bargain prices for the free puffs remaining in them. He credits Graham for teaching him the technique, and says it produced the best decade of his life for relative and absolute performance. But he concluded the approach was scalable only to a point and was the wrong foundation on which to build a large and enduring enterprise.

The pivot came from Charlie Munger, whose blueprint Buffett summarizes as: forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices. The 1972 purchase of See's Candy — a business earning about $4 million pre-tax on only $8 million of net tangible assets, but carrying "a broad and durable competitive advantage" with significant pricing power — became Buffett's object lesson in what quality businesses and brands are worth. See moats.

Buffett's stated decision rules appear repeatedly across the letters. On valuation he writes: "we try to stick to businesses we believe we understand ... If a business is complex or subject to constant change, we're not smart enough to predict future cash flows", and "we insist on a margin of safety in our purchase price", a principle he calls "the cornerstone of investment success." See margin-of-safety. On price versus value he repeats Graham's dictum that "Price is what you pay; value is what you get."

Buffett's primary self-described duty is increasing Berkshire's intrinsic value per share over long horizons — "a time horizon measured in perpetuity." He frames his own role narrowly: at the holding-company level he is involved in capital allocation and the selection and compensation of managers, leaving operating strategy to the subsidiary CEOs. See capital-allocation.

In the partnership era, before Berkshire, Buffett's conservatism was already the same thread he later pulled through Berkshire: he aimed "to bring risk of permanent capital loss (not short-term quotational loss) to an absolute minimum by obtaining a wide margin of safety in each commitment and a diversity of commitments." This insistence — that conservatism means avoiding permanent loss, not avoiding volatility or following convention — carries through to his risk-vs-uncertainty outlook today.

See alsoCopy Anchor Link

• mohnish-pabrai
• kerrisdale
• jamie-dimon
• markel-gayner
• prem-watsa-fairfax
• tom-russo
• chuck-akre
• amazon-bezos
• inflation-hedging
• index-vs-active-bets
• owner-earnings
• look-through-earnings

Investment philosophyCopy Anchor Link

The compiled, source-grounded version of this investor's beliefs lives at investment philosophy.

SourcesCopy Anchor Link

• berkshire-hathaway/Letters-Markdown/1997 - Letter to Shareholders.md
• berkshire-hathaway/Letters-Markdown/2014 - Letter to Shareholders.md
• berkshire-hathaway/Letters-Markdown/2011 - Letter to Shareholders.md
• berkshire-hathaway/Letters-Markdown/1992 - Letter to Shareholders.md
• berkshire-hathaway/Letters-Markdown/2008 - Letter to Shareholders.md
• berkshire-hathaway/Letters-Markdown/2025 - Letter to Shareholders.md
• berkshire-hathaway/Letters-Markdown/1990 - Letter to Shareholders.md
• buffett-partnership/Letters-Markdown/1962_Letter(3)_19630118.md