Stocks
Delve into the Berkshire chairman and CEO’s investment strategy.
Susan Dziubinski
Warren Buffett is undoubtedly one of the most respected investors of all time. On paper, Buffett’s investment strategy is pretty simple:
- Buy businesses, not stocks. In other words, think like a business owner, not someone who owns a piece of paper (or these days, a digital trade confirmation).
- Look for companies with competitive advantages that can be maintained, or economic moats. Firms that can successfully fend off competitors have a better chance of increasing intrinsic value over time.
- Focus on long-term intrinsic value, not short-term earnings. What matters is how much cash a company can generate for its owners in the future. Therefore, value companies by using a discounted cash flow analysis.
- Demand a margin of safety. Future cash flows are, by their nature, uncertain. To compensate for that uncertainty, always buy companies for less than their intrinsic values.
- Be patient. Investing isn’t about instant gratification; it’s about long-term success.
Of course, what's simple in theory can be less so in execution.
If you want to emulate Buffett’s investment strategy, we’ve compiled some of Morningstar’s work on the approach that he and late partner Charlie Munger have pursued at Berkshire Hathaway BRK.A BRK.B. We’ve also taken a look at funds that emulate Berkshire’s style and some of the undervalued stocks in Berkshire Hathaway’s portfolio today. We wrap things up with words of wisdom from Buffett on investing.
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What We’ve Learned From Warren Buffett and Charlie Munger
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How to Pick Stocks Like Warren Buffett
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Whether you’re new to the market or not, there’s a lot to learn from Berkshire Hathaway’s leader.
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5 Takeaways From Berkshire Hathaway’s 2021 Shareholder Letter
Warren Buffett discusses why he keeps cash on hand, warns of ‘bloviated bull,’ and explains why he’s not a stock-picker.
2020 Shareholder Letter Recap: Warren Buffett on Bonds, Buybacks, and Apple
What Berkshire Hathaway’s chair left out of this year’s annual shareholder letter is almost as notable as what he put in.
2019 Shareholder Letter Recap: 4 Takeaways From Berkshire Hathaway’s Annual Shareholder Letter
Warren Buffett addresses Berkshire Hathaway after his exit, the problem with corporate boards, and why equities are still the place to be long term.
2018 Shareholder Letter Recap: Buffett Says Focus on the Forest, Forget the Trees
In his annual letter to Berkshire Hathaway shareholders, Warren Buffett argues why the whole is much greater than the sum of its parts—and comments on that sizable cash stake.
2017 Shareholder Letter Recap: Stick With Big ‘Easy’ Decisions
In his annual letter to Berkshire Hathaway shareholders, Warren Buffett makes the case for doing less and sticking to the fundamentals of investing.
2016 Shareholder Letter Recap: Indexing the Best Choice for Investors Large and Small
Berkshire Hathaway CEO Warren Buffett praises indexing and American dynamism in his 2016 letter to shareholders.
2015 Shareholder Letter Recap: America’s Economic Magic Is Alive and Well
America’s golden goose of commerce and innovation will continue to lay more and larger eggs, writes the Berkshire Hathaway chair and CEO Warren Buffett in his annual letter to shareholders.
2014 Shareholder Letter Recap: Berkshire’s Simple Secrets to Success
In the firm’s annual letter to shareholders, Warren Buffett and Charlie Munger reflect on Berkshire Hathaway’s history and future prospects.
Charlie Munger, Warren Buffett Built Berkshire Hathaway to Thrive After They’re Gone
The author or authors do not own shares in any securities mentioned in this article.Find out about Morningstar’s editorial policies.