More Lessons from Warren Buffet

Since this year’s Berkshire Hathaway annual meeting in Omaha NE, Warren Buffett’s name has been in the news more than usual. He announced he is stepping down as the CEO of Berkshire after 60 years, though he will remain on as the Chair of the Board. What I find so amazing is how he turned a relatively small investment in a failed textile mill (back in 1965) into one of the largest companies in the world.

The shares Mr. Buffett holds in Berkshire today are worth approximately $160 billion, even after giving billions to charity. I recently read that his net-worth was $3 billion when he was 65 years old; still a staggering amount of wealth. How did he go from a personal net-worth of $3 billion in 1996, to $160 billion in 2025:

• Compounding- Following his business partner, Charlie Munger’s, first rule on compounding “Never interrupt it unnecessarily.” Mr. Buffett never went to “cash” with his investments.
• Buying and holding great companies- As I mentioned in my last blog, Berkshire owns over 70 companies, including Dairy Queen, and Burlington Northern Railroad. They also own stock in over 50 companies.
• Investing when others are panicking- I cannot think of a "crisis" that has passed during my 36-year career where Mr. Buffett has not made a significant equity purchase.
• Reinvesting dividends- In 1988 Buffett bought more than $1 billion in shares of Coca-Cola. Today those shares are worth over $27 billion with dividends in 2024 of $776 million.
• Longevity- This is one factor none of us can control but he has benefited from.

What we have to invest pales in comparison to what Buffett controls for Berkshire, but the lessons are no different for any one of us. We must stay invested, stay committed to our plan. It does not matter which political party is in control in Washington, or whether the Federal Reserve Bank will be lowering interest rates.

Since Mr. Buffet turned 65 in 1996,  U.S. equity markets have experienced two selloffs of more than 50%, Covid, inflation scare of 2022, and now tariffs, yet U.S. markets are up almost 6-fold. The S&P 500, representing the largest five hundred publicly traded companies in the U.S., was 1,056 in January of 1996, as of this writing it stands at 5,976. This does not take into consideration the quarterly dividends that were paid.

This may not be the kind of story that keeps investors glued to the latest economic or political news. My guess is Mr. Buffett sleeps well at night not worrying about what the Fed will do next, or what the latest tweet will be from the White House.

As always, share any comments you have.

Brett S Carleton, CFP®, ChFC®