Course 506:
Great Investors: Warren Buffett
In this course
1 Introduction
2 Determining Fair Value
3 Understanding Your Circle of Competence
4 Sustainable Competitive Advantages
5 Partnering with Admirable Managers
6 An Approach to Market Prices
7 Requiring a Margin of Safety
8 Concentrating on Your Best Ideas
9 The Bottom Line

Warren Buffett is widely regarded as the world's most successful investor, and it is no mistake we have repeatedly echoed his wisdom throughout this Investing Classroom series. The book value of his company, Berkshire Hathaway BRK.B, compounded at 21.9% per year between 1965 and 2004. That is more than double the 10.4% pretax return to the S&P 500 over the same period. According to Forbes, Buffett is the world's second-richest man with a net worth of about $44 billion at this writing. But he didn't stumble across a giant oil field, develop software, or inherit wealth. Rather, he built his fortune solely through astute investing. Aspiring investors, then, will certainly benefit by studying his methods. Fortunately, Buffett has been forthcoming.

In Berkshire's 1977 annual report, Buffett described the central principles of his investment strategy:

"We select our marketable equity securities in much the way we would evaluate a business for acquisition in its entirety. We want the business to be one (a) that we can understand; (b) with favorable long-term prospects; (c) operated by honest and competent people; and (d) available at a very attractive price."

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