Many investors are spreading the name of Warren Buffett.

This is partly because he is well known for clearly explaining his approach to investing.

But part of that is because Buffett is so good at it.

We should receive the latest shareholder letter next month Berkshire Hathaway summarizing last year’s performance, the last one with Buffett at the helm.

However, we already know that in the 60 years from 1964 to 2024, Berkshire’s market value per share increased incredibly under Warren Buffett’s leadership 5,502,284%.

To put this in context, someone investing $1,000 in Berkshire after Warren Buffett took over 60 years later would own shares worth about $55 billion.

How did Buffett deal with it?

Buffett had his opinion on what investing was

Many people invest – some very well – without actually having any point of view on what investing actually is.

Maybe they’re just investing money in stocks of companies they like, hoping the price will go up. Since this approach can work, it may seem that there is no need to provide your own point of view on what investing actually is.

However, Warren Buffett’s success was due to his willingness to learn from experience and develop a thoughtful approach over time.

After trying several investing styles, he came up with the idea of ​​buying shares in companies.

He just wanted to buy shares in what he thought were great companies. He would like to do this only at an attractive price (remember that this is not necessarily a low price) and then maintain it in the long run.

Focus on quality and long-term investment

Why does this matter?

Having a mighty, consistent point of view helped shape what Warren Buffett did and also helped him stay the course.

As an example, consider Berkshire’s stock halt American Express (NYSE: AXP).

In the 1960s, the company’s stock price plummeted when the market learned of a fraud involving an Amex subsidiary issuing warehouse bills for nonexistent vegetable oils.

Buffett realized that because American Express was the unwitting victim rather than the perpetrator of the fraud and it was not the core of Amex’s business, the long-term effects were likely to be minimal. American Express had a mighty, proven business with a powerful brand and a vast customer base.

Warren Buffett argued that the underlying value has not really changed. Even considering other risks, such as some cardholders not paying their bills, Buffett saw an opportunity when others were afraid.

He calls it “being greedy when others are fearful“.

It turned out to be the right call. Berkshire acquired a great company at an attractive price and has held on to its stock for decades.

Pooling profits

Buffett’s extraordinary long-term returns come from Berkshire continually reinvesting profits.

This is called folding.

Within six decades it could be extremely powerful. The 5,502,284% enhance mentioned above was “only” 19.9% ​​per year.

It’s impressive – but doesn’t sound incredible. But by capitalizing at this rate over decades, Buffett has delivered some truly great returns to shareholders.