Warren Buffett's 94th birthday: The legend leads Berkshire to new heights.
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Warren Buffett celebrated his 94th birthday on Friday, and his unique conglomerate has reached unprecedented value. This week, Berkshire Hathaway became the first non-tech firm to surpass a $1 trillion market cap, with Class A shares exceeding $700,000 for the first time.
Howard Marks, a respected investor and Buffett's friend, attributes Buffett's success to three key factors: a well-planned strategy executed with discipline, consistency, and remarkable insight over seven decades. Marks, co-founder and co-chairman of Oaktree Capital Management, emphasized that while discipline and consistency are crucial, they alone are not enough; without Buffett's unique insight, he wouldn't hold the title of the greatest investor ever.
Marks noted that Buffett's impressive record showcases the power of sustained high-rate compounding. He has never taken a break from his work. In the dynamic stock market of the 1960s, Buffett utilized an investment partnership to acquire a struggling textile company, Berkshire Hathaway. Today, the company is vastly different, encompassing a diverse range of businesses, including Geico insurance and BNSF Railway, alongside an equity portfolio valued at over $300 billion and a substantial cash reserve of $277 billion.
Buffett's strategic moves have inspired countless investors who study his approach. His investment in Coca-Cola during the late 1980s exemplified patient value investing in strong brands. His timely investment in Goldman Sachs during the financial crisis demonstrated his opportunistic nature in challenging times. More recently, his significant investment in Apple highlighted his adaptability in applying his value investing philosophy to modern markets.
Earlier this month, Buffett made headlines by disclosing that he had sold half of his Apple shares, signaling a shift in a highly profitable investment. Although Apple is often categorized as a growth stock, Buffett has consistently maintained that all investing is fundamentally about value—"You are putting out some money now to get more later on."
Buffett's decades of successful investing have resulted in an extraordinary track record. Since he took the helm in 1965, Berkshire shares have achieved an annualized gain of 19.8%, nearly double the S&P 500's 10.2% return. Cumulatively, Berkshire's stock has surged by 4,384,748%, compared to the S&P 500's 31,223% increase.
"His patience as an investor is unparalleled, which significantly contributes to his success," remarked Steve Check, founder of Check Capital Management, which holds a substantial investment in Berkshire. "He can wait indefinitely. Even at his age, when time is limited, he will continue to wait until he feels confident. I believe he will keep striving to do his best until the very end."
Buffett remains the chairman and CEO of Berkshire, although Greg Abel, chairman of the company's non-insurance operations and Buffett's chosen successor, has assumed many responsibilities. Earlier this year, Buffett indicated that Abel, 62, would take over all investment decisions after his departure.
Marks noted that Buffett's principles resonate with his own investment philosophy. Like Buffett, he disregards macroeconomic predictions and market timing, focusing instead on relentless value-seeking within his expertise. "He doesn't concern himself with market timing and trading; when others panic, he steps in. We aim to do the same," Marks stated.
Buffett, who studied under Benjamin Graham at Columbia University, encourages investors to view their stock holdings as fractional ownership in businesses. He believes that market volatility presents opportunities for savvy investors to capitalize on emotional selling.
Oaktree, managing $193 billion in assets, has emerged as a leading player in alternative investments, specializing in distressed lending and value opportunities. Marks, 78, has established himself as a prominent contrarian voice in the investment community. His widely read investment memos, initiated in 1990, are considered essential reading on Wall Street and have received high praise from Buffett, who stated, "When I see memos from Howard Marks in my mail, they're the first thing I open and read. I always learn something."
The two were introduced following the Enron bankruptcy in the early 2000s. Marks revealed that Buffett inspired him to write his book, "The Most Important Thing: Uncommon Sense for the Thoughtful Investor," well ahead of his original timeline. "He was very generous with his feedback. I don't think that book would have been written without his encouragement," Marks reflected. "I had intended to write a book upon retirement, but with his support, it was published 13 years ago."
Buffett's journey and his ability to find joy in his work well into his 90s resonate with Marks. "He says he skips to work in the morning. He approaches investing with enthusiasm and joy," Marks shared. "I still haven't retired, and I hope to follow his example for as long as I can."
