Warren Buffett, one of the most revered figures in finance, celebrated his 94th birthday today, marking the occasion with yet another monumental achievement for his investment empire, Berkshire Hathaway. This week, Berkshire Hathaway became the first non-technology company to surpass a $1 trillion market capitalization. In a further testament to its success, Berkshire’s Class A shares crossed the $700,000 mark for the first time in history.
Strategy, discipline, and insight
Howard Marks, co-founder and co-chairman of Oaktree Capital Management, attributes Buffett’s unparalleled success to a few key principles: a meticulously crafted investment strategy, executed with unwavering discipline and consistency over seven decades, coupled with Buffett's extraordinary market insight. While discipline and consistency are crucial, Marks believes it is Buffett’s unique market insight that truly sets him apart, solidifying his reputation as arguably the greatest investor of all time. Buffett’s career is a testament to the power of compounding over the long term. From the moment he took control of Berkshire Hathaway in the 1960s, he transformed the company from a struggling textile business into a diversified conglomerate encompassing everything from insurance giant Geico to the vast BNSF Railway. Today, Berkshire boasts an equity portfolio exceeding $300 billion and holds a cash reserve of $277 billion, underscoring the massive scale of its operations.
Iconic investments and unmatched returns
Buffett’s investment moves have consistently captured the attention of the financial world. His 1980s investment in Coca-Cola epitomized his approach to value investing, focusing on companies with strong brands and durable competitive advantages. His bold decision to invest in Goldman Sachs during the 2008 financial crisis demonstrated his ability to identify and capitalize on opportunities amidst market chaos. More recently, his substantial investment in Apple showcased his adaptability in applying value investing principles to the modern tech era.
The results of Buffett’s strategy are nothing short of extraordinary. Since 1965, Berkshire Hathaway’s shares have delivered an average annual return of 19.8%, nearly double the S&P 500’s 10.2% return over the same period. This remarkable performance has translated into a cumulative gain of 4,384,748% for Berkshire shareholders, compared to the S&P 500’s 31,223% rise.
No age to retire
Despite his age, Buffett remains at the helm of Berkshire Hathaway as chairman and CEO, with Greg Abel, vice chairman of Berkshire’s non-insurance operations, positioned to succeed him. Abel currently oversees much of the conglomerate’s day-to-day operations and will assume full control of investment decisions when Buffett eventually steps down. Buffett’s influence extends far beyond Berkshire Hathaway. Howard Marks credits Buffett with reinforcing crucial investment principles in his own approach, such as the importance of focusing on one’s circle of competence and resisting the temptation to time the market. Marks has successfully built Oaktree Capital into a leading force in alternative investments, specializing in distressed debt and value-based strategies.
Buffett’s passion for investing remains as strong as ever. Known for his statement that he "skips to work" every morning, Buffett’s enthusiasm for his craft is infectious, inspiring countless others, including Marks, to continue working with vigor well into their later years. As Warren Buffett continues to steer Berkshire Hathaway to new heights, his legacy as one of history’s greatest investors is secure. His life's work exemplifies the power of patience, discipline, and a deep understanding of value investing—principles that will undoubtedly guide and influence future generations of investors.