Buffett Reflects on 60 Years at Berkshire Helm: 'Cardinal Sin Is Delaying the Correction of Mistakes'

In his annual letter to shareholders, Warren Buffett, the legendary CEO of Berkshire Hathaway, reflected on his 60-year tenure at the helm of the company, offering valuable insights into his investment philosophy and the importance of learning from mistakes. Buffett, who took over a struggling New England textile company in 1965 and transformed it into a massive conglomerate, has consistently emphasized the importance of value investing, understanding the intrinsic value of companies, and buying them at a discount to that value.

Throughout his career, Buffett has made it clear that he is not immune to making mistakes, and he has often spoken about the importance of learning from them. In his letter, he acknowledged that he has made mistakes over the years but assured shareholders that his chosen successor, Greg Abel, is not one of them. Buffett wrote, "We are impartial in our choice of equity vehicles, investing in either variety based upon where we can best deploy your (and my family’s) savings. Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities. Greg has vividly shown his ability to act at such times."

Buffett's investment philosophy has evolved over the past six decades, with key lessons that investors can learn from his approach. He has consistently emphasized the importance of understanding the intrinsic value of companies and buying them at a discount to that value. Buffett has also become more selective about the management teams he invests in, prioritizing honesty, competence, and shareholder orientation. Additionally, he has placed greater emphasis on understanding and investing in companies with durable competitive advantages, or "moats." These companies have structural advantages that enable them to sustain profitability and defend their market share over the long term.

Diversification has played a significant role in Berkshire Hathaway's success, with the company maintaining a balanced portfolio across various sectors and asset classes. Buffett's investment portfolio spans a wide range of industries, including technology, finance, consumer goods, energy, and others. This diversification has allowed Berkshire Hathaway to weather economic downturns and capitalize on growth opportunities across different industries.

Buffett's letter also addressed the company's cash position, which has grown to $334.201 billion after selling off much of its Apple and Bank of America stock in the past year and continuing to generate money from all its subsidiaries. Despite this substantial cash reserve, Buffett affirmed that he has no plans to offer a dividend. Instead, he plans to continue reinvesting the company's profits into its businesses and investments.

In what might be a nod to his advanced age, Buffett announced that this year's shareholder meeting in May would be shorter than usual. The meeting, which typically attracts tens of thousands of people, will now only feature questions from 8 a.m. until 1 p.m. — several hours less than usual. Buffett also acknowledged using a cane these days to avoid "falling flat on my face."

Buffett's reflections on his 60 years at the helm of Berkshire Hathaway offer valuable insights into his investment philosophy and the importance of learning from mistakes. Investors can learn from his approach by focusing on understanding the intrinsic value of companies, prioritizing management quality, and maintaining a diversified portfolio to weather economic downturns and capitalize on growth opportunities.