7 Questions About Warren Buffett That Every Investor Ought to Ask

Over the course of an investing career that has spanned more than half a century, Warren Buffett has obliterated the S&P 500 and the Dow Jones Industrial Average (DJINDICES: ^DJI  ) . Since 1964, the per-share book value of his conglomerate, Berkshire Hathaway (NYSE: BRK-B  ) has risen by a factor of nearly 7,000 for an annualized return of nearly 20%.

The following presentation asks -- and answers -- seven questions that probe various aspects of that exceptional result. You'll also learn why Berkshire Hathaway isn't worth twice its current market value and why Bank of America (NYSE: BAC  ) has become Berkshire's fifth largest stock holding, even though the common shares don't show up on its balance sheet.

More of Warren's wisdom
If you want to go beyond the presentation, Warren Buffett has already given those who have been paying attention the tools to become better investors. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.

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  • Report this Comment On March 24, 2014, at 5:25 AM, Interventizio wrote:

    Ah ah. Good one that on the japanese cuisine.

    Particularly interesting the slide about the difference between value/growth investing.

  • Report this Comment On March 24, 2014, at 5:47 PM, paulalbert wrote:

    As stated, in some ways Buffett doesn't strictly adhere to the original Benjamin Graham concept of value investing. Probably a more accurate description is GARP - "Growth at a Reasonable Price".

    BRK's large size and ability to decide quickly on risk situations has certainly contributed to returns in recent years. Goldman Sachs' common shareholders for example might have been willing to step up to a rights offering of preferred at say 8% at a conversion premium of 15%, but doing that kind of offering takes time and would require perhaps inconvenient disclosures during the financial crisis. Instead BRK got a 10% preferred with no conversion premium. The warrants on BAC also got in retrospect very favorable terms, admittedly not without considerable risk. The margin of safety was in the preferred position and very favorable pricing, nice work if you can get it, but more a function of size and rapid decision process than investment genius!

    With outright acquisitions of Heinz, Burlington Northern, etc. BRK is in some ways now more an industrial holding company than stock portfolio manager. Whether the outstanding rates of return can be maintained at such a large size will be interesting to see. I do not regard the inevitable departure of Warren Buffett and Charlie Munger as the really key issue, perhaps at the time an emotional market negative reaction, but there are plenty of acolytes and disciples there to continue the investment philosophy, but size ultimately impacts the level of continuing compound returns that are achievable.

  • Report this Comment On March 24, 2014, at 5:55 PM, paulalbert wrote:

    I forgot to comment on the Japanese cuisine issue: I love Japanese food and probably would have found it excellent. However, even if it might not appeal to you, and I guess steak is more to the liking of someone from Omaha than fresh uncooked fish, etc., but, basic business principle number one, never insult your host, especially a prominent person from Japan. I find that story a little unbelievable, but not in my mind a favorable one for Mr. Buffett. I speak from my experience as an investment banker at Morgan Stanley doing extensive work with Japanese clients in the 1970s.

  • Report this Comment On March 25, 2014, at 12:22 AM, jcereck wrote:

    Join and loose money.. that's the hype!!! he will leave the service and place in some no nothing members like he did with gems!!!

  • Report this Comment On March 25, 2014, at 8:28 AM, TMFAleph1 wrote:


    I love Japanese cuisine, too, and I found Buffett's behavior in this instance dumbfounding and ridiculous. According to the account, Buffett knew full well that he was embarrassing himself, but could not bring himself to overcome his disgust for fine cuisine.

    By the way, there is no reason to doubt the veracity of the story -- it is contained in Alice Schroeder's official biography.

  • Report this Comment On March 25, 2014, at 4:06 PM, whyaduck1128 wrote:

    I wish you slobbering sycophants would stop referencing Mr. Buffett's record going back to 1964, as if things he did in the Sixties, Seventies, Eighties , and even Nineties are that relevant to what WE should be investing in TODAY.

    Or are you afraid to just look at his record this century as compared to other fine investment managers?

  • Report this Comment On March 25, 2014, at 9:41 PM, dstb wrote:

    The glorification of Buffett has gotten old. Yes, one of the most unreal success stories in history. I have learned from books about his investing history and style. But the old guy that does no wrong and approaches sainthood is a bit much. This guy has benefitted from more sweetheart deals than probably anyone in history. Yeah yeah we could own the stock and benefit with him. I did. I sold in 2007 and the stock is up a mere 56% since. Somehow his net worth seems to rise faster. I'm over this folk story.

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Alex Dumortier

Alex Dumortier covers daily market activity from a contrarian, value-oriented perspective. He has been writing for the Motley Fool since 2006.

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