Uploaded May 2018 | Updated September 2026, 3 hours ago
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How has Warren Buffett managed to grow his wealth year after year having a net worth of over $80 billion dollars as of today, when he had around $6,000 dollars at 15?
This while other investors, who often started out with more money, has struggled to even come close to grow their wealth to the same extent as Warren.
Some people say it’s luck, and that might have played a part of growing his fortune, but it’s far from the reason for why he’s gone to become one of the wealthiest people in the world. So I’ve been digging deep to really find out his investment strategies and what triggers him to open that fat wallet and invest in certain companies while turning down others.
So what is it that makes Warren splash the cash and invest in certain companies while neglecting others?
Well he actually revealed what he looks for when he evaluates a business in his 1977 shareholder letter for Berkshire Hathaway and he’s got 4 investing principles that he follows almost religiously before making the decision to invest.
The first principle is simply to invest in a business that he understands. His advising to stay within your circle of competence and invest your hard earned money within industries that you have some knowledge in. And if you don’t know shit about the markets and industries, then simply start learning about only one specific industry that interests you somewhat and go from there. Warren intentionally stays aways from investing in tech companies simply because he doesn’t understand them or that market, probably because that wasn’t really available when he grew up.
The second principle is that the business should have favorable long-term prospects. This is where the moat becomes important and can be a deciding factor of whether a company will be able to grow and increase in value year after year. He’s said if you’re not comfortable holding a stock for 10 years, you shouldn’t own it for 10 minutes.
The third principle is that it should be operated by competent and honest people. This is another reason for Warrens excessive studies he makes before investing. Is the management run by competent people? Has any of the executives been involved in some fraudulent activities? Would the business collapse if the CEO left?
The fourth principle is that it should be available for a very attractive price. This is the only principle that he has adjusted since 1977, and instead of “very attractive price”, it’s now “sensible price”. Here’s where Benjamin Graham's value investing comes into play and if the business is somewhat undervalued and ticks all the other principles, then Warren Buffett will have a hard time turning this opportunity down.
berkshirehathaway.com/letters/1977.html
berkshirehathaway.com/letters/2007ltr.pdf
thestreet.com/story/14309494/1/how-to-invest-like-billionaire-warren-buffett.html
investopedia.com/investing/warren-buffetts-investing-style-reviewed
businessinsider.com/warren-buffetts-4-investing-principles-2016-1?r=US&IR=T&IR=T
cnbc.com/berkshire-hathaway-portfolio
marketwatch.com/story/from-6000-to-67-billion-warren-buffetts-wealth-through-the-ages-2015-08-17
Music:
Life of Riley by Kevin MacLeod is licensed under a Creative Commons Attribution license (creativecommons.org/licenses/by/4.0/)
Source: incompetech.com/music/royalty-free/index.html?isrc=USUAN1400054
Artist: incompetech.com
Website: primedlifestyle.com
Instagram: Primed
The intelligent investor: amzn.to/2KLGYKm
How has Warren Buffett managed to grow his wealth year after year having a net worth of over $80 billion dollars as of today, when he had around $6,000 dollars at 15?
This while other investors, who often started out with more money, has struggled to even come close to grow their wealth to the same extent as Warren.
Some people say it’s luck, and that might have played a part of growing his fortune, but it’s far from the reason for why he’s gone to become one of the wealthiest people in the world. So I’ve been digging deep to really find out his investment strategies and what triggers him to open that fat wallet and invest in certain companies while turning down others.
So what is it that makes Warren splash the cash and invest in certain companies while neglecting others?
Well he actually revealed what he looks for when he evaluates a business in his 1977 shareholder letter for Berkshire Hathaway and he’s got 4 investing principles that he follows almost religiously before making the decision to invest.
The first principle is simply to invest in a business that he understands. His advising to stay within your circle of competence and invest your hard earned money within industries that you have some knowledge in. And if you don’t know shit about the markets and industries, then simply start learning about only one specific industry that interests you somewhat and go from there. Warren intentionally stays aways from investing in tech companies simply because he doesn’t understand them or that market, probably because that wasn’t really available when he grew up.
The second principle is that the business should have favorable long-term prospects. This is where the moat becomes important and can be a deciding factor of whether a company will be able to grow and increase in value year after year. He’s said if you’re not comfortable holding a stock for 10 years, you shouldn’t own it for 10 minutes.
The third principle is that it should be operated by competent and honest people. This is another reason for Warrens excessive studies he makes before investing. Is the management run by competent people? Has any of the executives been involved in some fraudulent activities? Would the business collapse if the CEO left?
The fourth principle is that it should be available for a very attractive price. This is the only principle that he has adjusted since 1977, and instead of “very attractive price”, it’s now “sensible price”. Here’s where Benjamin Graham's value investing comes into play and if the business is somewhat undervalued and ticks all the other principles, then Warren Buffett will have a hard time turning this opportunity down.
berkshirehathaway.com/letters/1977.html
berkshirehathaway.com/letters/2007ltr.pdf
thestreet.com/story/14309494/1/how-to-invest-like-billionaire-warren-buffett.html
investopedia.com/investing/warren-buffetts-investing-style-reviewed
businessinsider.com/warren-buffetts-4-investing-principles-2016-1?r=US&IR=T&IR=T
cnbc.com/berkshire-hathaway-portfolio
marketwatch.com/story/from-6000-to-67-billion-warren-buffetts-wealth-through-the-ages-2015-08-17
Music:
Life of Riley by Kevin MacLeod is licensed under a Creative Commons Attribution license (creativecommons.org/licenses/by/4.0/)
Source: incompetech.com/music/royalty-free/index.html?isrc=USUAN1400054
Artist: incompetech.com
