the essays of warren buffett

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The Essays of Warren Buffett: Lessons for Corporate America Paperback – March 8 2013

There is a newer edition of this item:.

• By arranging Buffett's lengthy writings thematically, Cunningham's classic clarifies all the principles of Buffett's philosophy of business and investing. 
• Cunningham's new book, Berkshire Beyond Buffett: The Enduring Value of Values, takes deep dives with Berkshire executives inside their businesses to glimpse the future by a study of the past.  
• ISBN-10 1611634091
• ISBN-13 978-1611634099
• Edition 3rd
• Publisher Carolina Academic Pr
• Publication date March 8 2013
• Language English
• Dimensions 18.42 x 1.91 x 26.04 cm
• Print length 307 pages
• See all details

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• Publisher ‏ : ‎ Carolina Academic Pr; 3rd edition (March 8 2013)
• Language ‏ : ‎ English
• Paperback ‏ : ‎ 307 pages
• ISBN-10 ‏ : ‎ 1611634091
• ISBN-13 ‏ : ‎ 978-1611634099
• Item weight ‏ : ‎ 544 g
• Dimensions ‏ : ‎ 18.42 x 1.91 x 26.04 cm
• #284 in Corporate Finance in Accounting
• #627 in Corporate Finance (Books)
• #2,542 in Popular Economics (Books)

About the author

Lawrence a. cunningham.

Lawrence Cunningham's two dozen books include The Essays of Warren Buffett, which Cunningham self-published into an international best-seller that he has arranged for translation into a dozen languages.

An influential thought leader in both value investing and corporate governance, Cunningham's other notable books include Quality Investing (long time best seller with AKO Capital), The AIG Story (with Hank Greenberg) and Margin of Trust (which Warren Buffett singled out for special mention in his 2020 letter to Berkshire Hathaway shareholders).

Cunningham ​advises companies, boards and shareholders, for many years as the founder of Quality Shareholders Group and recently as special counsel at Mayer Brown LLP. He has served on numerous corporate boards, of both private and public companies, including Markel Group (New York Stock Exchange) and Constellation Software Inc. (Toronto Stock Exchange).

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The Essays of Warren Buffett: Lessons for Investors and Managers, 6th Edition Paperback – 13 May 2021

A gold mine of investing advice from the most successful investor in history

THE ESSAYS OF Warren Buffett SIXTH EDITION

When Warren Buffett speaks, people worldwide listen. And with good reason: Buffett is the most successful investor-manager in history. He has set world records for achieving both high personal net worth, exceeding US$80 billion, and high corporate value for his holding company, Berkshire Hathaway, approaching US$600 billion. Time magazine lists Buffett as among the most influential people in the world―and he is.

According to Buffett, the best book collating his philosophy is The Essays of Warren Buffett by Lawrence A. Cunningham, the internationally renowned scholar and expert on Buffett and Berkshire. Through many updated editions dating to 1997, The Essays is the definitive account of Buffett’s approach to investing and management, consisting of a carefully curated and thematically organized compendium of Buffett’s original annual letters, along with Cunningham’s priceless commentaries.

" The book on Buffett. A superb job." ― Forbes

"Extraordinary." ― Money

"A classic on value investing and the definitive source on Buffett." ― Financial Times

One of "the smartest books we know." ― Fortune

• ISBN-10 1119803276
• ISBN-13 978-1119803270
• Edition 6th
• Publisher Wiley
• Publication date 13 May 2021
• Language English
• Dimensions 15.2 x 2.33 x 22.9 cm
• Print length 400 pages
• See all details

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From the inside flap.

When Warren Buffett speaks, people worldwide listen. And with good reason: Buffett is the most successful investor-manager in history. He has set world records for achieving both high personal net worth, exceeding US$80 billion, and high corporate value for his holding company, Berkshire Hathaway, approaching US$600 billion. Time magazine lists Buffett as among the most influential people in the world—and he is.

“ The book on Buffett. A superb job.” — Forbes

“Extraordinary.” — Money

“A classic on value investing and the definitive source on Buffett.” — Financial Times

One of “the smartest books we know.” — Fortune

From the Back Cover

About the author.

Lawrence A. Cunningham is the Tucker Research Professor at George Washington University in Washington DC and New York City and Director of its Quality Shareholders Initiative. A leading authority on corporate culture and quality investing, Cunningham's dozen books include Quality Investing , Quality Shareholders , Dear Shareholders , and Margin of Trust .

Product details

• Publisher ‏ : ‎ Wiley; 6th edition (13 May 2021)
• Language ‏ : ‎ English
• Paperback ‏ : ‎ 400 pages
• ISBN-10 ‏ : ‎ 1119803276
• ISBN-13 ‏ : ‎ 978-1119803270
• Dimensions ‏ : ‎ 15.2 x 2.33 x 22.9 cm
• 255 in Corporate Finance

About the author

Lawrence a. cunningham.

Lawrence Cunningham's two dozen books include The Essays of Warren Buffett, which Cunningham self-published into an international best-seller that he has arranged for translation into a dozen languages.

An influential thought leader in both value investing and corporate governance, Cunningham's other notable books include Quality Investing (long time best seller with AKO Capital), The AIG Story (with Hank Greenberg) and Margin of Trust (which Warren Buffett singled out for special mention in his 2020 letter to Berkshire Hathaway shareholders).

Cunningham ​advises companies, boards and shareholders, for many years as the founder of Quality Shareholders Group and recently as special counsel at Mayer Brown LLP. He has served on numerous corporate boards, of both private and public companies, including Markel Group (New York Stock Exchange) and Constellation Software Inc. (Toronto Stock Exchange).

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The Essays of Warren Buffett: Lessons for Corporate America

1997, The Essays of Warren Buffett

The Essays of Warren Buffett: Lessons for Corporate America. Selected, Arranged, and Introduced by Lawrence A. Cunningham

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This book has been replaced by a newer edition:

The Essays of Warren Buffett: Lessons for Corporate America, Fifth Edition

by Lawrence A. Cunningham , Warren E. Buffett

2019, 352 pp, paper, ISBN 978-1-5310-1750-7

The Essays of Warren Buffett

Lessons for corporate america, fourth edition.

Tags: Business , Corporations/Corporate Law , Taxation

Table of Contents (PDF)

328  pp  $32.00

ISBN 978-1-61163-758-8 eISBN 978-1-61163-759-5

The year 2015 marks the fiftieth anniversary of Berkshire Hathaway under Warren Buffett's leadership, a milestone worth commemorating. The tenure sets a record for chief executive not only in duration but in value creation and philosophizing. The fourth edition of The Essays of Warren Buffett: Lessons for Corporate America celebrates its twentieth anniversary. As the book Buffett autographs most, its popularity and longevity attest to the widespread appetite for this unique compilation of Buffett's thoughts that is at once comprehensive, non-repetitive, and digestible. New and experienced readers alike will gain an invaluable informal education by perusing this classic arrangement of Warren's best writings.

The fourth edition's new material includes:

• Warren's 50th anniversary retrospective, in what Bill Gates called Warren's best letter ever, on conglomerates and Berkshire's future without Buffett;
• Charlie Munger's 50th anniversary essay on "The Berkshire System";
• Warren's definitive defense of Berkshire's no-dividend practice; and
• Warren's best advice on investing, whether in apartments, farms, or businesses.

"Larry Cunningham has done a great job at collating our philosophy." — Warren Buffett "Larry Cunningham takes Buffett's brilliant letters to a still-higher level by organizing them into single-subject chapters. The book begins, moreover, with an excellent introduction by Larry." — Carol Loomis "This is a very important book. I recommend it to everyone who is interested in learning about investing, corporate governance, and business judgement." — Bill Ackman "The book on Buffett—a superb job." — Forbes "Extraordinary—full of wisdom, humor, and common sense." — Money "A classic on value investing and the definitive source on Buffett." — Financial Times "Cunningham has done a truly commendable job distilling and organizing the essence of Buffett's letter to Berkshire shareholders...While the essays reviewed in the latest edition of this volume range across a broad assortment of topics, for most readers the most valuable part of this book will be Buffett's lessons and insights on investing. It is extraordinarily rewarding to be able to survey the accumulated wisdom of one of the world's most successful investors." — Kevin M. LaCroix, The D&O Diary

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The Essays of Warren Buffett: A Complete Book Summary

• Books and Resources , Investing 101
• Andy Shuler
• March 17, 2020

I feel like I’ve been reading the Essays of Warren Buffett for literally a lifetime, and although it hasn’t nearly need that long, it does feel like I’ve obtained a lifetime of information from his book. 

Looking back at some of the previous summaries that I have written, Buffett does an amazing job of making sure that he starts off with a great foundation for the new investor and then by the end of the book, things are moving along at 70MPH on the highway so you better buckle up!

That might seem intimidating, but it shouldn’t.  It should actually make you happier that you might not understand it all because the that just means that it will be able to provide value to you now, and in the future, as your investing career continues.

Like I said – I’ve written quite a few different summaries on a lot of these chapters, and I’ve even skipped some really good ones so I wasn’t essentially rewriting the book, but I’ve narrowed my list down to my Top 5 chapters in The Essays of Warren Buffett for our beginner investor:

Defining Intelligent Investing According to Warren Buffett

Buffett’s big investment philosophy is that we should be looking for companies that can drastically change their value for the long-term, not just looking for some sort of short-term gain.  Don’t buy a company and then sell it when it goes up 10% – look for that stock that’s going to become a tenbagger! 

This is the exact reason why they don’t usually invest in tech companies because the future is so uncertain in terms of what will be a competitive advantage for those tech companies, and he lives by the saying “if you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

In summary, Buffett said that if you want to be a successful, average investor, you need to focus on two things:

• Find out how to value a business
• Understand how to think about market prices

If you can successfully do both of these then you’re going to be poised for long-term success during your time investing in the stock market.  It’s very important for you to understand first and foremost what you think a company is worth, and while this might seem hard to do, you can do so by understanding the financial ratios of the company and their potential path forward. 

I know that many people will likely get stressed or overwhelmed by me saying you need to “understand the financial ratios of the company” and I totally understand that, but that’s exactly why Andrew created the Value Trap Indicator to help get you the information that you need without having to be as in the weeds as other investors.  I mean, work smart, not hard, right?

The VTI also takes into account the market price of the company you’re evaluating, but this is another thing that’s very beneficial for you to understand on your own.  The market price of the company is quite simply the price that other investors are willing to pay for the company, not what the company is actually worth.  

Now, when I first started investing, I told myself that whatever the company is selling for is what the company is worth because ‘perception is reality’ so if people are willing to pay for it, then that’s what it is worth.  While that might sound great in a bull market, when things really get tough, that company that still has negative earnings is likely going to get hit extremely hard and that share price is going to drop faster than a hot potato.

Don’t believe me?  Well, during this coronavirus scare, the S&P 500 has dropped 14% over a 3-week span and Tesla has dropped 33%. 

In other words, there’s really two pieces you need to know as an investor – what is the intrinsic value of the company and what is the current price of the company. 

When you can identify those, your job as an investor is to find the companies that are being sold for well under their intrinsic value, buy some shares, and then sit back and reap the rewards.

Thoughts on the High Yield Bond Market from Warren Buffett

This article essentially says that Bonds have a place in the investing world, but it has to be for a very specific person in a very specific situation.  The average bond earns 2-4% while the Stock Market average CAGR is 11%, so if you’re investing in bonds waiting for the downturn in the market, you probably are missing out on much larger gains just to buy low in the years despite missing all of that uptick.

Buffett explains that Bonds are good for the investor that needs to have access to short-term cash because that is very liquid and easy to access as compared to investing in company stocks for a major company like Berkshire.

So, how does that impact the average investor?

Well, you should follow the same advice – only invest in bonds if it’s for the short-term.  Personally, I invest in a high-yield savings account for my emergency fund but bonds can work well, especially if you use a bond ladder.  The only issue is that it’s not as liquid as a savings account, so it’s a bit of risk vs. reward. 

Like I said, bonds are usually a good thing if you’re simply just looking for some security that is going to perform right around, or maybe a bit above, the inflation rate, but I wouldn’t expect much more as an investor.  I have bonds in my HSA because the last thing that I would want to have happen is for me to invest in stocks, the market crashes and my portfolio is cut in half, and then I need that money for a health related issue and now I might not even be working since it is a health issue.

If it’s not something that you could see yourself needing in the immediate future, avoid bonds!  Regarding my retirement accounts – I have 0% invested in any of them because I am young.  If you’re going to need the money in 5 years or less, I am ok with you investing in bonds.  Any time frame that is greater than 5 years, put it into the market, baby!

Let the entire investing history be your “proof in the pudding” and trust that even if a downturn arises, like the coronavirus fears that we are currently in, then trust that the market will rebound. 

You might be asking why you should have that trust and the answer is simple – because it has rebounded in the past and it’s more than likely going to rebound in the future as well.

Here’s the Optimal Dividend Policy According to Warren Buffett

DIVIDENDS!  Andy loves him some dividends, and so does Buffett!  I mean, I’d even go to a dividend buffet if one existed…. Get it?  Buffett?  Buffet?  Bad joke, I know…

While Buffett does love dividends, he is more so focused on the company employing their capital correctly.  This doesn’t mean always paying a dividend or never paying one – it means that the company should do what is will be the most useful for continued success of the company.

“For every dollar of retained earnings by the corporation, at least one dollar of market value will be created for owners.”

For the company to decide to not pay out that $1 in dividends, they should make sure that they’re able to use that $1 of earnings to generate a future value of something that is $1, at a minimum, or likely much more.

In other words, if the company only paid out a $1 dividend and kept the remaining $3, then that $3 that they retained better generate at least that much in the future and if it doesn’t, then the company is quite simply underutilizing their capital, and that can be a major red flag for investors.

The Real Benefits of Share Buybacks as Explained by Warren Buffett

In general, share buybacks are perceived as a good thing!  Buying back shares of the company has a couple major benefits that Buffett goes into that should help you as an investor of the company:

1 – The Straight Cash Reason

When a company buys backs shares, the total amount of outstanding shares is shrinking, so this should help you as an investor when looking at the total EPS for the company.  It’s important to understand when your companies are buying back shares, however, so that you’re not tricked into thinking that the earnings of the company are growing when in fact they might be shrinking, but since the total outstanding shares are shrinking at a greater speed, the total EPS looks higher.

I’ve written before about how important it is to understand this because you could very easily get tricked, but if the earnings are continuing to increase and the total outstanding shares are decreasing, then your investments are just becoming more and more valuable by the second

2 – The Breath of Confidence Reason

This is more of a qualtitative factor than a quantitative one, but if the company is buying back shares, then they hopefully think that the stock is undervalued, otherwise it would be foolish to buy back shares.  Now, while a management team of ANY company is likely the most bullish opinion of their company, and rightfully so, it should still be a breadth of confidence that they’re saying that their stock is undervalued and willing to put their money where their mouth is and buy back those shares.

Of course, you still need to do your homework and make sure that you agree with their analysis of their stock value, but this is definitely a good sign and the market will likely view it as a positive as well!

An Example of Accounting Fraud as told by Warren Buffett

In summary, the main goal of this chapter is to make sure that the management team of your investments have the same goals that you do.  Some management teams are only focused on the short-term, some on the long-term, some are only focused on getting the company to IPO and then cashing out and moving on. 

Regardless of what their goal is, you need to understand it BEFORE you invest in that company, because if you don’t, you could very well find yourself with a ‘bad’ investment simply because the management is steering the company in a different way than you were hoping the company was going to go.

In short, just like almost every other chapter, do your homework!

If you purchase the book, you’re going to be able to learn many, many more lessons from Buffett about his investing journey and things that he thinks are incredibly important.  In a sense, I think some of these chapters are just Buffett getting some things off his chest.  He goes on these rants at times about things that he thinks are just completely ludicrous, such as how Owner Earnings are reported or even talking about the difference in economic goodwill and accounting goodwill . 

I’ve included my top 5 chapters for the new investor above in this article, but I’ve also written some other summaries including one on arbitrage trading and how it can have an impact on Buffett’s business as well as in your own personal portfolio .

To buy the essays of Warren Buffett will set you back about $30 but I guarantee you will get much, much greater rewards than $30 by learning directly from the value investing GOAT, Warren Buffett. 

Chances are, you might even be able to find the book at your local library but I really encourage you to consider purchasing it because I can tell you for a fact that this book is one that I am going to find myself reading more than once, and likely on a fairly regular basis.

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Warren Buffett is one of the greatest investors of all time and his words are closely followed by investors. As CEO of Berkshire Hathaway, Buffett has generated nearly 20 percent annualized returns for shareholders from 1965 to 2023, compared to 10.2 percent for the S&P 500 .

Buffett’s ability to speak about complex topics in simple terms and explain his investment philosophy so clearly makes him one of the most quotable investors ever.

Here are some of the best Warren Buffett quotes of all time.

1. “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.”

This simple rule shows how important Buffett thinks managing your emotions is in order to be a good investor . Markets are made up of human beings who get overly optimistic at times and overly pessimistic at other times. Understanding these two emotions can help you take advantage of market conditions and profit as an investor.

2. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

Buffett got his start buying the cheapest stocks he could find, but over time he evolved to focus on businesses with strong underlying economics. While poor businesses may be able to be purchased cheaply and sold for a profit after a slight improvement in results, good businesses reward their shareholders over time as the business grows and compounds.

3. “Price is what you pay; value is what you get.”

Buffett is probably the most famous practitioner of value investing , which involves buying stocks at a discount to their intrinsic value. When Buffett talks about value, he’s talking about what the underlying business will produce for its shareholders in terms of earnings and cash flow. Then he hopes to pay an attractive price that accounts for the business’s underlying fundamentals.

4. “Big opportunities come infrequently. When it’s raining gold, reach for a bucket, not a thimble.”

Here, Buffett highlights the importance of making big bets when prices are attractive. He’s long been an advocate for talented investors concentrating investments in their best ideas. After buying a stake in Apple in 2016, the position grew to more than 50 percent of Berkshire’s equity portfolio, though Buffett has been selling the iPhone maker’s shares in 2024 .

5. “At the business school, I tell them that they would all be better off if when they got out of school somebody gave them a card with 20 punches on it and every time they made an investment decision, they used up a punch.”

Students from many different universities have been lucky to hear Buffett share his business advice with them over the years. This quote highlights the importance of thinking carefully about an investment before buying. Buffett thinks most investors would end up with better results if they could only make 20 investments in their life because it would force them to focus on the best opportunities and buy a lot when they arose.

6. “You don’t get paid for activity, you only get paid for being right.”

There are always people in the investment world who are throwing out new ideas or things that they think you should be doing in your portfolio. But having a lot of activity in your portfolio could generate fees and taxes that cost you as an investor . Activity isn’t your friend as an investor, it’s being right about the investments you make, regardless of how frequently they occur.

7. “The big question about how people behave is whether they’ve got an Inner Scorecard or an Outer Scorecard. It helps if you can be satisfied with an Inner Scorecard.”

This quote shows the importance of living your life on your own terms and not worrying too much about what other people think about you. It can also serve you well as an investor to think about your own financial goals and not get too wrapped up in worrying whether someone else is doing better than you.

Buffett says you should ask yourself if you’d rather be known as the world’s greatest investor, but in reality you have the world’s worst record? Or be known as the world’s worst investor, but actually have the best record?

8. “Only buy something that you’d be perfectly happy to hold if the market shut down for ten years.”

Buffett has long touted the benefits of being a long-term investor , but this quote also emphasizes the importance of focusing on the business you own, rather than how its stock price moves around each day.

Many investors seem to have more of a trading mentality when they buy a stock, selling it quickly for a small profit or abandoning it if the price falls by a certain amount. But a rational business owner would never take that approach to buying and selling an entire business. Always remember that when you’re buying a stock, you’re buying an ownership stake in a real business.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.

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Who is Warren Buffett? Why investors are looking to the 'Oracle of Omaha' this week

Worried eyes turned to plunging global markets Monday after apprehension built about a possible incoming recession.

Billionaire investor Warren Buffett ignited speculation he’s soured on stocks as Berkshire Hathaway's cash holdings soared to $276.9 billion, in part because Berkshire sold a large portion of its stake in Apple. Buffett, whose influence on the U.S. stock market is significant, reinforced fears the economy may be slowing with his latest move. 

But who is Buffett, and how did he accumulate his wealth and influence?

Who is Warren Buffett?

Buffett is a businessman and philanthropist. Known as the “Oracle of Omaha,” Buffett is considered one of the most successful investors of all time. He runs Berkshire Hathaway, a major conglomerate that owns GEICO, Duracell, Dairy Queen and other companies. 

Buffett, the son of U.S. Rep. Howard Homan Buffett, was born in Nebraska in 1930. He bought his first stock at age 11 and filed taxes for the first time when he was 13 years old, according to Forbes. 

When he took over Berkshire Hathaway in 1965, it was a textile manufacturer. During the 2007-2008 mortgage crisis, he made a series of lucrative deals – investments in Goldman Sachs, General Electric, Coca-Cola and Apple, as well as a purchase of the railroad company Burlington Northern Santa Fe Corporation. 

As of 2024, these are the top 10 holdings in the Warren Buffett portfolio , which represent about 87% of the company’s holdings: 

• Bank of America Corp.
• American Express Corp.
• Coca-Cola Co.
• Chevron Corp.
• Occidental Petroleum Corp.
• Moody’s Corp.
• Kraft Heinz Co.
• Mitsubishi Corp.

Stock market live updates: US markets feeling impact of plunging markets

How old is Warren Buffett?

Buffett is 93 years old. He was born Aug. 30, 1930.

How much is Warren Buffett worth?

Buffett has an estimated net worth of almost $130 billion as of August 2024. According to the Forbes Real-Time Billionaires List, he is the seventh-richest person in the world , ahead of Bill Gates but behind Elon Musk, Jeff Bezos and Mark Zuckerberg. 

With Bill and Melinda Gates, Buffett created Giving Pledge, a charitable campaign asking America’s wealthiest people to donate at least half of their wealth to charity. Buffett has promised more than 99% of his wealth will go to philanthropy during his lifetime or at the time of his death. 

“Were we to use more than 1% of my claim checks on ourselves, neither our happiness nor our well-being would be enhanced. In contrast, that remaining 99% can have a huge effect on the health and welfare of others,” Buffett wrote on Giving Pledge. “That reality sets an obvious course for me and my family: Keep all we can conceivably need and distribute the rest to society, for its needs.”

Is Jimmy Buffett related to Warren Buffett?

No, Buffett is not related to the late musician Jimmy Buffett . But the pair were close – Jimmy called Warren “Uncle Warren” and regarded him as a business mentor, according to The New York Times. Warren called his friend “Cousin Jimmy.” They even once took a 23andMe DNA test to see if there was a biological connection, the Times reported. 

Sad to wake up to the news this morning that Jimmy Buffett has died. Interesting character to be sure. My friend George... Posted by Alan Paul on  Saturday, September 2, 2023

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Has the Long Friendship of Bill Gates and Warren Buffett Reached Its Final Act?

Growing tensions between the two billionaires, over issues both substantive and stylistic, have roiled the world of philanthropy.

By Anupreeta Das

Anupreeta Das is the author of the forthcoming book “Billionaire, Nerd, Savior, King,” from which this article is adapted.

In the summer of 1991, Mary Gates, the mother of the Microsoft billionaire Bill Gates, convinced her workaholic 35-year-old son to spend the July 4 holiday at Hood Canal, a scenic, outdoorsy location about two hours from Seattle that had long been the family getaway.

The Oracle of Omaha, Warren Buffett, was among the guests. When Mrs. Gates tried to introduce her son to Mr. Buffett, however, he brushed her off, saying that he didn’t want to meet a “stockbroker.”

But the two men hit it off immediately. Settling into a patterned couch, Mr. Buffett, dressed in a red polo shirt and dark trousers, his left foot propped up against the coffee table, and Mr. Gates in a tennis outfit — shorts and a white shirt, his white socks coming up to mid-calf, his mop of hair tousled — talked for 11 hours straight. The other guests had to pull them apart. Mr. Gates was surprised by the penetrating questions Mr. Buffett directed at him about the software business, and found himself warming to the avuncular Midwestern billionaire.

The two have been close friends ever since. Once, recounting the story of their meeting to students at the University of Nebraska-Lincoln, Mr. Gates called it an “unbelievable friendship.” Mr. Buffett quipped, “The moral of that is, listen to your mother.”

Theirs has been an unusual friendship. Mr. Buffett is folksy and outgoing, and never passes up an opportunity to crack a joke. He likes to speak in aphorisms. He enjoys breaking down complex investing principles into simple nuggets that anyone could understand. When he meets new people, Mr. Buffett is genuinely curious about their backgrounds. He asks them questions and listens intently, eyebrows furrowed, to the answers. Banter comes to him easily.

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• Why Warren Buffett has built a mighty cash mountain

Berkshire Hathaway’s boss is an impressive investor, not an economic oracle

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N o investor commands attention quite like Warren Buffett. As boss of Berkshire Hathaway, an investment firm that he has run for almost six decades, Mr Buffett’s every movement is scrutinised. When he shifts in his seat, investors large and small ponder what it might mean for their portfolios.

Results released by Berkshire Hathaway on August 3rd gave watchers more reason than normal to take note. The company announced that it had cut its stake in Apple by almost half, to $84bn. Its holdings of cash and Treasury bills increased from $189bn in the first quarter of the year to $277bn at the end of June. The backdrop to the announcement was dismal. Stockmarkets were in the midst of a sell-off, after weaker-than-expected data on American employment had provoked worries about the strength of the world’s largest economy.

Mr Buffett’s reputation has taken on an almost spiritual element: he is known as the “Oracle of Omaha” for a reason. The tens of thousands of investors who flock to Berkshire Hathaway’s shareholder meeting are more disciples than stockpickers. It is no surprise, then, that some onlookers see the cash accumulation as a dark omen. They note that Mr Buffett also accumulated cash in the mid-2000s, before the global financial crisis, leaving him in a strong position to buy when other investors’ balance-sheets were hammered. What does he know about the economy that they do not?

Less than they imagine. Mr Buffett’s extraordinary talent as an investor is not based on a capacity for seeing the future. Indeed, his outperformance is all the more impressive for his lack of supernatural abilities. In research published in 2018, Andrea Frazzini, David Kabiller and Lasse Pedersen, all of AQR Capital Management, a quantitative investment firm, found that Mr Buffett’s long-run outperformance can be straightforwardly explained. He has bought high-quality stocks at relatively cheap prices, and applied leverage judiciously. His strategy is, in short, classic “value investing”, albeit a form that is combined with the ability to borrow cheaply through Berkshire Hathaway’s insurance business.

Just as the explanation for his extraordinary performance is acumen rather than magic, so is the reason for Mr Buffett’s cash build-up. In May Mr Buffett said that his investors should expect him to sell shares and build up reserves for two reasons. One is that he expects taxes on capital gains to rise, and wants to realise his profits before that happens. The other is that he sees few cheap, high-quality companies in which to invest. The stockmarket is expensive across the board.

Berkshire Hathaway’s investments in Japan are an example of both the merits and the limits of Mr Buffett’s strategy. It appears unlikely that the firm would have sold the stakes it holds in five sogo shosha , cheaply valued trading houses, during the recent bout of market turmoil. In February Mr Buffett mentioned the investments as among those he expected to hold indefinitely. At the same time, he has promised his stakes in the companies will not exceed 10%, a figure his holdings already bump up against. Therefore options for expansion—either at home or abroad—remain scant.

Mr Buffett has never claimed to posses the foresight his followers attribute to him. Indeed, he once joked that any firm which hires an economist has one employee too many, and says he has never made any investment decision based on an economic prediction. Although Berkshire Hathaway emerged from the global financial crisis in better shape than the vast majority of its peers, the company’s cash holdings declined as a share of its total assets in the quarters running up to the collapse of Lehman Brothers in 2008—not the path an omniscient investor would have taken.

Mr Buffett’s new cash pile is undoubtedly enormous. Berkshire Hathaway could, if it wished, buy McDonald’s at the burger chain’s current share price and have $80bn left over, or take a stake in Meta larger than the one held by Mark Zuckerberg, the firm’s boss. If markets do enter a steeper downturn, Mr Buffett will be in an enviable position, able to snap up firms trading at discounts. Fans of Mr Buffett’s clear-headed approach to investing should nevertheless take him at his word. His simple maxims are at the root of his long and impressive performance as an investor; his growing cash pile holds no hidden explanation. The value investing Mr Buffett practises has become increasingly tough. In the absence of a much more protracted sell-off, it is likely to remain so. ■

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This article appeared in the Finance & economics section of the print edition under the headline “Buffett’s cash hoard”

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Warren Buffett was reportedly bothered by high costs and complacency at the Gates Foundation

Billionaire Warren Buffett had been bothered for years by how the Bill & Melinda Gates Foundation was being run, according to a New York Times report on Sunday.

The Berkshire Hathaway CEO, who recently said the philanthropy will stop getting his money after he dies, had grown to view the foundation as bloated with inflated operating costs, sources told the Times .

Buffett also told staffers that the Gates Foundation had become complacent and had less appetite for risk that could boost the effectiveness of its giving, the report said.

The Gates Foundation didn’t provide an immediate comment, and Berkshire Hathaway didn’t respond to requests for comment.

Buffett had been a top donor to the Gates Foundation, giving more than $39 billion between 2006 and 2023. Over the years, Buffett and Bill Gates developed a close friendship. And in 2021, Buffett said his goals “are 100% in sync with those of the foundation.”

The Times noted he attached three conditions to his money: Either Bill Gates or Melinda French Gates had to remain active in the foundation; Buffett’s contributions had to be counted as charity versus gifts; and the value of his annual contributions had to be given away within a year, not including the 5% that’s already required of philanthropies.

Meanwhile, Buffett had made clear to the Gates Foundation that it shouldn’t count on continuing to receive his money over the long term, given that he was aging and his pledges would only encompass his lifetime, sources told the Times .

According to his will, his remaining wealth will go to a charitable trust overseen by his three children, who must decide unanimously how the money will be spent.

In a separate interview with the  Times last month, French Gates, who stepped down from the foundation in May, said she wasn’t surprised by Buffett’s decision, adding that she was aware he was making it.

“The other thing that’s really important to say is he has given an enormous sum through the Bill & Melinda Gates Foundation,” she said. “So I think this has just been a good evolution to his thinking on how he wants to do his giving.”

While it’s technically still possible the Gates Foundation could get more of Buffett’s wealth after he dies, sources told the Times that Buffett’s children all agree that none of the remaining Berkshire Hathaway shares to be given away will go to the Gates Foundation.

Buffett himself was explicit about what would happen.

“The Gates Foundation has no money coming after my death,” he told the Wall Street Journal in June.

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