On August 28, Berkshire Hathaway, led by Warren Buffett, made history by becoming the first non-technology company to reach a market value of $1 trillion. This milestone came after Buffett made the strategic decision to sell nearly half of the company’s shares in Apple, which helped Berkshire build up a large cash reserve of $280 billion.
Buffett’s Early Career
Warren Buffett began his career as an investment analyst, starting at his father’s firm and later working at Graham-Newman Corp., where he sharpened his investment skills. By the age of 30, Buffett had already become a millionaire, demonstrating his talent for making smart investment decisions. In 1965, he co-founded Berkshire Hathaway with Charlie Munger, who would become a key partner in his investment journey.
Value Investing Philosophy
Buffett firmly believes in value investing, a strategy he learned from his mentor, Benjamin Graham. Value investing involves finding undervalued stocks, meaning they are priced lower than their true worth. Buffett and other value investors look for companies the market has overlooked, aiming to buy these stocks and hold onto them for long-term gains.
Diversification Strategies
Berkshire Hathaway started as a textile manufacturing company, but Buffett quickly realized that this industry had limited growth potential. He decided to diversify the company’s investments by purchasing businesses that were temporarily struggling but had strong fundamentals. These businesses include well-known names like GEICO, Coca-Cola, and Duracell.
Investment Principles and Approach
Buffett’s approach to investing is disciplined and straightforward. He categorizes investment opportunities into three groups: “yes,” “no,” and “too tough to understand.” For a long time, he avoided technology stocks because he believed they were difficult to predict. However, he later changed his view when he recognized the strong market position of companies like Apple, which he now sees as having a strong competitive advantage, or a “moat.” Warren Buffett’s success is built on a combination of value investing, smart diversification, and a long-term vision, helping make Berkshire Hathaway one of the most valuable companies in the world.
About Berkshire Hathaway
Founded in 1839, Berkshire Hathaway originally began as a textile manufacturing company. When Warren Buffett took control of the company in 1965, he transformed it into a massive conglomerate. Based in Omaha, Nebraska, Berkshire Hathaway owns companies like GEICO and Duracell. The company is known for its decentralized management style, allowing each subsidiary to operate independently. Berkshire’s annual shareholder meetings are famous, attracting thousands of attendees and often resembling a festival. The company focuses on long-term investments and intrinsic value, with its “A” shares often valued at over $500,000 each. Berkshire Hathaway is also recognized for its strong commitment to philanthropy.
