Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, celebrated his 94th birthday on May 3, 2024, amidst a significant milestone for his conglomerate. Berkshire Hathaway, under Buffett’s leadership, became the first nontechnology company to reach a market capitalization of over $1 trillion. Additionally, the value of Berkshire Class A shares surpassed $700,000 each for the first time in history, highlighting the continued success and growth of the company under Buffett’s guidance.
### The Secret to Buffett’s Success
Howard Marks, a renowned investor and friend of Buffett, attributes three key factors to Buffett’s ability to lead Berkshire Hathaway to new heights even in his advanced age. Marks emphasizes the importance of a well-thought-out strategy executed with discipline, consistency, and exceptional insight over the past seven decades. He notes that while discipline and consistency are essential, it is Buffett’s unique insight that sets him apart as one of the greatest investors in history.
Marks highlights Buffett’s unwavering commitment to compounding wealth at a high rate over an extended period without any breaks, demonstrating Buffett’s dedication to his craft and the power of long-term investing. Despite his age, Buffett has remained actively involved in managing Berkshire Hathaway, a testament to his passion for investing and his ability to adapt to changing market conditions.
### From Textile Company to Global Conglomerate
Buffett’s journey with Berkshire Hathaway began in the 1960s when he used an investment partnership to acquire a struggling textile company named Berkshire Hathaway. Over the years, Buffett transformed the company into a diverse conglomerate with holdings in various industries, including insurance, transportation, and technology. Today, Berkshire Hathaway boasts a portfolio of businesses that contribute to its immense market value and financial strength.
One of Buffett’s most notable investments was in Coca-Cola in the late 1980s, showcasing his preference for value investing in established brands with competitive advantages. His strategic move to invest in Goldman Sachs during the financial crisis highlighted his ability to seize opportunities during periods of market turmoil. More recently, Buffett’s significant stake in Apple exemplifies his willingness to adapt his investment approach to changing market dynamics and emerging trends.
### Unparalleled Track Record and Long-Term Perspective
Buffett’s track record of delivering consistent returns to Berkshire shareholders has solidified his reputation as one of the most successful investors in history. Over the years, Berkshire Hathaway’s stock has generated an impressive annualized gain of 19.8% from 1965 to 2023, outperforming the broader market index, the S&P 500. The cumulative growth of Berkshire shares under Buffett’s stewardship has far surpassed the returns of the S&P 500, reflecting his long-term perspective and patient approach to investing.
Steve Check, founder of Check Capital Management, attributes Buffett’s success to his unmatched patience and ability to wait for the right opportunities in the market. Despite his age, Buffett continues to exhibit a willingness to hold investments for the long term, emphasizing the importance of staying true to one’s investment principles and remaining focused on the underlying value of businesses.
### Legacy and Succession Planning
While Buffett remains actively involved in managing Berkshire Hathaway, the company has implemented a succession plan to ensure a smooth transition of leadership when the time comes. Greg Abel, vice chairman of Berkshire’s noninsurance operations and Buffett’s designated successor, has taken on increasing responsibilities within the conglomerate. Buffett has entrusted Abel with making investment decisions on behalf of Berkshire Hathaway once he is no longer at the helm.
Marks acknowledges Buffett’s influence on his own investment philosophy, emphasizing the importance of focusing on value investing and staying within one’s circle of competence. Like Buffett, Marks values discipline and a long-term perspective in investing, avoiding market timing and macro forecasting in favor of fundamental analysis and careful evaluation of investment opportunities.
### Inspirational Leadership and Lasting Impact
Buffett’s enduring passion for investing and his ability to find joy in his work well into his 90s serve as an inspiration to investors and professionals alike. Marks, who credits Buffett with motivating him to write a book on investing, appreciates Buffett’s enthusiasm and dedication to his craft. Buffett’s legacy as an investor and business leader transcends his financial success, leaving a lasting impact on the investment community and shaping the future of value investing.
As Buffett continues to guide Berkshire Hathaway to new heights and inspire generations of investors with his wisdom and insight, his leadership and legacy serve as a beacon of excellence in the world of finance. By staying true to his principles, embracing change, and fostering a culture of continuous learning and growth, Buffett has established himself as a true icon in the realm of investing, leaving an indelible mark on the industry for years to come.