Warren Buffett
Oracle of Omaha who defined value investing through moats and long-term compounding
Warren Buffett combined Benjamin Graham's value investing with Charlie Munger's moat thinking. Berkshire Hathaway's long-term record shows the power of disciplined capital allocation, durable businesses, and compounding.
Methodologies
- Moat Screening Framework - Identify durable competitive advantages as the first filter for long-term investment decisions.
- Contrarian Market Sentiment Rule - Be fearful when others are greedy, and greedy when others are fearful.
Key decisions and timeline
- 1956 Founded Buffett Partnership - Scaling a great methodology from personal capital to institutional scale is a wealth multiplier; early partnerships built on trust become lasting capital.
- 1965 Gained Control of Berkshire Hathaway - A holding structure is itself a capital allocation tool; the key is redirecting cash flow from low-return assets to high-return ones.
- 1972 Acquired See's Candies, Moat Thesis Established - The shift from Graham's cigar-butt thinking to moat thinking was the critical breakthrough in Buffett's investment philosophy.
Beliefs and mental models
- The Moat Is the Core of Business Value - A business with a durable competitive advantage can defend against competition and maintain excess returns long-term; the moat is the most important criterion for stock selection.
- The Best Holding Period Is Forever - Frequent trading is the enemy of compounding; truly outstanding businesses should be held long-term, avoiding mistakes driven by market noise.
- Only Make Decisions Within Your Circle of Competence - Knowing what you don't know is as important as knowing what you do know; making decisions outside your circle is a fatal risk.
- Economic Moat Analysis - Systematically assess the sources of a business's durable competitive advantage to judge the solidity of its intrinsic value.
- Mr. Market Parable - The market is a neurotic partner who offers quotes, not an authority on value; exploit market emotions rather than follow them.
- Intrinsic Value Discounting - A business's value equals the present value of all its lifetime cash flows; buying at a discount to intrinsic value is the margin of safety.
Sources
- Berkshire Hathaway Annual Letters 1965-2023
- The Snowball: Warren Buffett and the Business of Life, Alice Schroeder, 2008
- CNBC Warren Buffett Archive
- The Essays of Warren Buffett: Lessons for Corporate America, Lawrence A. Cunningham, 1997