Warren Buffett
Quality businesses, bought at sensible prices, held for decades.
Berkshire Hathaway compounded at roughly 19.9% a year from 1965 through 2024, against about 10.4% for the S&P 500. Compounded over sixty years, that gap is the difference between a gain of roughly 39,000% and one of roughly 5,502,000%.
Educational biography, not investment advice. Describing how someone invested is not a recommendation that you invest the same way. Figures were checked against public sources in September 2026.
Biography
Born in Omaha in 1930
He bought his first stock at eleven and filed a tax return at thirteen, deducting his bicycle as a paper-route expense. He was rejected by Harvard Business School, which he later called the best thing that ever happened to him, because it sent him to Columbia to study under Benjamin Graham.
Graham's student, then his employee
After Columbia he worked at Graham-Newman, absorbing the deep-value discipline of buying statistically cheap securities. He ran his own partnerships from 1956, applying Graham's methods with unusual concentration.
Berkshire, 1965 onward
He took control of a failing New England textile company and spent the next six decades converting it into an insurance-anchored conglomerate. He later called the textile purchase itself the worst investment of his life, a mistake of buying something cheap rather than something good.
The handover
Greg Abel became chief executive on 1 January 2026, with Buffett remaining chairman. The succession had been signalled publicly since 2018.
Investment style
Buffett's method changed substantially once Charlie Munger convinced him that a wonderful business at a fair price beats a fair business at a wonderful price. Most of what people call “Buffett investing” is the post-Munger version.
- Economic moat — A durable structural advantage — brand, switching costs, network effects, low-cost production — that lets a business fend off competitors for decades rather than quarters.
- Circle of competence — Invest only in businesses you can actually evaluate. The boundary matters more than the size: he sat out the 1990s technology boom entirely and accepted years of underperformance rather than buy what he could not assess.
- Owner earnings — What the business could pay out after the capital spending needed to maintain its position, which is often materially below reported net income.
- Margin of safety — Inherited from Graham. Pay enough below your estimate of value that being somewhat wrong is survivable.
- Float as leverage — Berkshire's real engine. Insurance premiums are collected before claims are paid, giving him a large, cheap, effectively permanent pool of other people's money to invest. Very few investors have any equivalent.
- Inactivity as strategy — “Our favorite holding period is forever.” Low turnover defers capital gains tax and avoids paying spreads repeatedly.
The record
| Measure | Figure |
|---|---|
| Berkshire annualised, 1965–2024 | ~19.9% |
| S&P 500 annualised, same period | ~10.4% |
| Berkshire cumulative gain | ~5,502,000% |
| S&P 500 cumulative, with dividends | ~39,000% |
The honest caveats
Every approach on this site comes with the reasons it might not work for you. This one is no exception.
- The record is front-loaded. The most spectacular returns came in the partnership years and early Berkshire, when he ran small sums and could buy tiny, obscure, deeply mispriced securities. Recent decades have been far closer to market returns. Size is the enemy of outperformance, and he has said so himself repeatedly.
- The float is not replicable. A retail investor has no insurance operation supplying low-cost leverage. Academic work has attributed a meaningful part of Berkshire's excess return to this leverage applied to safe, quality, cheap stocks.
- Deals nobody else was offered. In crises he was offered preferred-stock terms — Goldman Sachs in 2008, for instance — that existed because he was Warren Buffett. That is not a strategy anyone else can follow.
- It requires tolerating long stretches of looking wrong. He materially underperformed during the late 1990s and was widely written off as out of touch, months before the technology unwind vindicated him. Most people cannot sit through that, and the ones who cannot would have sold at exactly the wrong time.
Frequently asked questions
What is Warren Buffett's investment strategy?
Buying businesses with durable competitive advantages, run by capable management, at prices below his estimate of intrinsic value, and holding them for very long periods. In practice it also depends heavily on insurance float, which supplies cheap permanent leverage that ordinary investors do not have.
What annual return did Warren Buffett achieve?
Berkshire Hathaway compounded at roughly 19.9% a year from 1965 through 2024, versus about 10.4% for the S&P 500 over the same span. The strongest results came in the earlier decades when he managed far less money.
Can an ordinary investor copy Buffett?
Partially. The principles of buying quality, insisting on a margin of safety, and holding for long periods are broadly available. The insurance float, the crisis-era preferred deals, and the ability to influence the companies he buys are not. Anyone claiming to replicate his returns is ignoring the parts that cannot be replicated.
Is Warren Buffett still running Berkshire Hathaway?
Greg Abel became chief executive on 1 January 2026. Buffett remains chairman.