Who is Warren Buffett and why is his investment strategy important?

Warren Buffett is widely considered one of the most successful investors in history. As CEO of Berkshire Hathaway since 1965, he's generated returns of over 5,500,000% for shareholders, averaging about 20% annually for 60 years. His investment strategy focuses on buying quality companies at reasonable prices, understanding the businesses he invests in, and holding for the long term. Buffett's consistent success through multiple market cycles has made his approach a blueprint for value investors worldwide.

What is Berkshire Hathaway?

Berkshire Hathaway is Warren Buffett's investment conglomerate that owns dozens of businesses completely (like GEICO insurance and BNSF Railway) while also maintaining a large stock portfolio of public companies (like Apple and Coca-Cola). Originally a textile company that Buffett acquired in the 1960s, it's now one of the world's largest companies with a market value over $700 billion. Berkshire's Class A shares (BRK.A) are famously expensive, often trading above $500,000 per share because Buffett has never split them.

What happens to Berkshire Hathaway after Buffett steps down?

When Warren Buffett steps down as CEO (planned by end-2025), Greg Abel will take over. Abel has been with Berkshire for years and currently oversees all non-insurance operations. The transition has been carefully planned, with Abel already designated as Buffett's successor. Investors are particularly interested in how Abel will deploy Berkshire's massive $347.7 billion cash reserve. While Berkshire's culture and investment philosophy are expected to remain similar, any leadership change after 60 years naturally creates both uncertainty and opportunity in the market.

What is Buffett's investment philosophy?

Warren Buffett's investment philosophy centers on a few key principles: First, he only invests in businesses he thoroughly understands. Second, he looks for companies with strong competitive advantages (what he calls "economic moats") that protect their profits. Third, he focuses on the long term, famously saying "our favorite holding period is forever." Fourth, he's patient and waits for the right price, preferring to buy great companies at fair prices rather than fair companies at great prices. Finally, he ignores short-term market fluctuations and focuses on the underlying business performance. This disciplined approach has been the foundation of his remarkable success.

Why does Buffett hold so much cash right now?

Berkshire Hathaway's record $347.7 billion cash position reflects Buffett's patience and discipline. He's willing to wait for the right opportunities at the right prices rather than invest just for the sake of being fully invested. In recent years, Buffett has expressed concern about high market valuations and has stated that he hasn't found many businesses that meet his criteria at prices he considers reasonable. This cash reserve gives Berkshire tremendous flexibility to make large acquisitions or investments when opportunities arise, especially during market downturns when quality assets become available at discounted prices.

15 handpicked stocks

Bye-Bye Buffet: The 5,500,000% Investor

Follow in the footsteps of Warren Buffett, one of history's greatest investors, with this carefully selected portfolio of his favorite companies. As Buffett prepares to step down as Berkshire's CEO, now's your chance to invest like the Oracle of Omaha.

Han Tan | Market Analyst

Updated 2 days ago | Published at mai 18