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Yahoo
19 hours ago
- Business
- Yahoo
Warren Buffet's Retirement: 5 Smart Money Moves That Made Him His Massive Fortune
Warren Buffet is one of the richest men in the world, with a current net worth of approximately $157 billion, according to Forbes. As the CEO of Berkshire Hathaway for 60 years, Buffett has been the perfect case study for how some relatively straightforward business principles can result in massive success. Discover More: Read Next: While Buffett certainly has some advantages that most average investors don't — from incredible stock-picking acumen to nearly unlimited capital reserves — the principles that he follows are basic enough for anyone to follow and understand. With news of Buffett's retirement buzzing, here's a look at five smart money moves from the Oracle of Omaha that you can adapt to use at a personal level. Berkshire Hathaway is a conglomerate of hundreds of businesses. Essentially, it acts as a holding company for Buffett's investment choices. To make it into Berkshire's portfolio, a company has to be a quality business trading at a discount. In most cases, this means it's priced below what Buffett determines to be its 'intrinsic value.' This provides the opportunity for future profits when the market 'correctly' reprices the business. It's true that the average investor likely doesn't have the time or talent to analyze a company's cash flows and future earnings to derive an 'intrinsic value.' But the principle behind the process remains applicable to all investors and can be distilled down to this simple strategy: Buy low, sell high. Trending Now: Buffett has been famously quoted as saying that his favorite holding period for a stock is 'forever.' Buffett is the anti-trader, a long-term investor who gives his stocks years if not decades to turn huge profits. This gives Buffett the time to enjoy the benefits of compound interest and also to take advantage of long-term capital gains tax rates. These are both fundamental investment concepts that anyone can adopt. One of Buffett's driving investment principles is that you should always keep cash reserves on hand so that you can take advantage of any market opportunities. Now, it's unlikely that you'll ever amass the whopping $334 billion in cash reserves that Berkshire Hathaway currently holds, but the idea behind amassing cash reserves applies to everyone. While you shouldn't hold too much cash in your portfolio, having some on hand allows you to be flexible and adapt to the current market environment. Buffett is far from the only financial expert to recommend understanding what you buy, but he holds to this mantra like an oath. Before he famously bought a massive position in Apple stock, he stubbornly avoided the hot tech stocks that were driving the market higher because he admitted he didn't really understand them. Although he may have missed out on some big gains from well-known companies like Nvidia, he's still managed to assemble a portfolio that has absolutely trounced the returns of the S&P 500 for a decades-long stretch. Clearly, the stocks that Buffett does choose to invest in are ones he thoroughly understands, including their profit potential. As of March 2025, Berkshire Hathaway held approximately $126 billion in debt. While that may be a lot of debt in an absolute sense, relatively speaking, it's effectively nothing. Berkshire has cash reserves of almost three times the amount of its debt — giving it net debt of $0 — and it generated over $424 billion in revenue in 2024 alone. Undoubtedly, the debt that Berkshire carries on its books serves an investment purpose, otherwise Buffett, who famously decries debt, would simply pay it off. The same principle should hold true with most investors. Debt should only be used to serve an investment purpose, such as taking out a mortgage to buy a property. Otherwise, you should use your cash reserves to pay that down, particularly if it's high-interest consumer debt, such as on a credit card. While you may never reach the lofty net worth of multi-billionaire Warren Buffett, you can very easily use some of his investment principles to make smart money moves in your own life. And who knows? Given enough time and investment acumen, maybe you too could parlay your strategy into a 10-digit net worth — or at least a solid retirement nest egg. More From GOBankingRates The New Retirement Problem Boomers Are Facing This article originally appeared on Warren Buffet's Retirement: 5 Smart Money Moves That Made Him His Massive Fortune
Globe and Mail
30-05-2025
- Business
- Globe and Mail
Prediction: This American Industrial Giant Could Be Warren Buffett's New Secret Stock
Warren Buffett has been one of the most closely followed investment personalities on Wall Street for nearly 60 years. With compound annual returns nearly twice as good as the S&P 500 (SNPINDEX: ^GSPC), it's no wonder why Buffett has earned the moniker the "Oracle of Omaha." What I find fascinating about Buffett is that when he is asked questions about his strategies or economic outlooks, his answers are almost always incredibly simple. He doesn't use fancy finance jargon, nor does he act like he knows something the rest of the world doesn't. Buffett sticks to the basics, and it works. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » With that said, one mysterious attribute of Buffett's investment choices is that from time to time, his firm, Berkshire Hathaway, chooses to keep new positions hidden until required by securities regulations to be revealed. For reference, if Berkshire owns 5% or more of the outstanding shares of a business that it is invested, then they would have to make this public knowledge. It's likely that Berkshire prefers to keep these positions hidden so that it doesn't lead to pronounced trading around one of its new core businesses. Per Berkshire's most recent 13F filing, Buffett and his team appear to be building a position in a new secret stock. While it's anyone's guess as to what company could be Buffett's newest darling, it's entertaining to speculate what the Oracle might be buying next. Let's explore the types of businesses that Buffett has a knack for. From there, I'll analyze some recent trading activity out of Berkshire to help narrow down what industry Buffett may be eyeing right now. Lastly, I'll take a guess at which stock I think Berkshire may be building a position in. What types of companies does Warren Buffett like to invest in? Buffett's investment philosophy isn't inclusive of fancy swing trading strategies or quantitative analysis around the derivatives market. Rather, Berkshire has a relentless focus on value investing. In other words, Buffett doesn't chase momentum or volatile growth stocks. In addition, Berkshire's portfolio boasts a number of America's most iconic brands, including Coca-Cola, Apple, Bank of America, Visa, Chevron, Occidental Petroleum, Domino's Pizza, and American Express. Not only have each of these companies built brand moats at global scale, but each generates enormous amounts of cash flow that can be passed on to investors in the form of dividends or share buybacks -- two other cornerstones of Buffett's investment criteria. Parsing Buffett's breadcrumbs Given these details, it's clear that Buffett has a preference for consumer brands, energy, and financial services. With that in mind, let's see if Buffett has dropped any subtle breadcrumbs as to which industry his new secret stock might be in. In Berkshire's first-quarter earnings report, the firm categorizes its portfolio as follows: Category Cost Basis as of March 31, 2025 Cost Basis as of Dec. 31, 2024 Change Banks, insurance and finance $14.3 billion $15.7 billion ($1.4 billion) Consumer products $13.8 billion $12.6 billion $1.2 billion Commercial, industrial, and other $49.1 billion $47.1 billion $2.0 billion Total $77.1 billion $75.5 billion $1.6 billion Data source: Berkshire Hathaway 10Q. This data doesn't tell investors too much about Buffett's secret stock. All that can be determined from these figures is that Berkshire has been trimming positions in the financial services industry while adding to consumer products and the industrial sectors. Complementing this analysis with Berkshire's most recent 13F can help narrow down the options, though. During the first quarter, Berkshire sold 48,660,056 shares of Bank of America -- reducing its exposure by 7%. In addition, the firm also sold 4% of its position in Capital One and completely exited two bank stocks: Citigroup and Nu Holdings. In addition, Berkshire added to Domino's Pizza and Constellation Brands during the first quarter -- hence, the consumer products category rose by $1.2 billion. Given these details, I'm confident that Buffett's secret stock is in the commercial, industrial, and other category. What company do I think is Warren Buffett's secret stock? To help further support my hypothesis, consider that many of Berkshire's purchases during the first quarter were concentrated in stocks such as Pool Corp, HEICO, and Occidental Petroleum. While I do not know for certain how much capital Berkshire deployed into its new position, I can make a reasonable estimate. These financials indicate that Berkshire spent about $2 billion in the commercial, industrial, and other portion of its portfolio. Based on the amount of shares purchased and the average share prices during the quarter for Pool Corp, HEICO, and Occidental Petroleum, I am assuming Berkshire invested approximately $358 million across these stocks. If I subtract that total from the aggregate $2 billion in the table, it would look like roughly $1.6 billion was allocated toward the secret stock. Since Buffett would have to reveal the stock if Berkshire owned 5% or more of the company, an initial investment of $1.6 billion likely means that Berkshire's new business is valued in the tens of billions (at a minimum). The company I think that may have earned a spot in Berkshire's portfolio is Caterpillar (NYSE: CAT). With a market capitalization of $161 billion, a $1.6 billion initial investment would imply a small position for Berkshire's portfolio. Caterpillar is an iconic American industrials business, the stock boasts a modest 1.6% dividend yield, and the company has consistently repurchased shares in recent years. CAT PE Ratio (Forward) data by YCharts While the company is trading at a historical premium on a forward price-to-earnings (P/E) basis, there has been some notable valuation compression as of late -- thanks in large part to uncertainty around new tariff policies. Nevertheless, despite some near-term macroeconomic headwinds, it appears that investing in American infrastructure -- particularly in the artificial intelligence (AI) arena -- is on the rise from both foreign and domestic partners. I think Caterpillar is positioned to benefit greatly from this ongoing AI-related and other infrastructure investment in the U.S. for years to come -- hence, buying the dip right now might be a savvy move. While the ideas explored throughout this article may help shed some light into how a billionaire such as Buffett built his fortune, it is important to understand that I am merely speculating on Berkshire's secret stock. While I do think it is an industrials business, my guess is as good as anyone else's. Only time will tell what business has caught Buffett's eye and earned a spot in his prestigious portfolio. Should you invest $1,000 in Caterpillar right now? Before you buy stock in Caterpillar, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Caterpillar wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,761!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $826,263!* Now, it's worth noting Stock Advisor 's total average return is978% — a market-crushing outperformance compared to170%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025 American Express is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Adam Spatacco has positions in Apple. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, Chevron, Domino's Pizza, and Visa. The Motley Fool recommends Capital One Financial, Constellation Brands, Heico, Nu Holdings, and Occidental Petroleum. The Motley Fool has a disclosure policy.
Forbes
29-05-2025
- Business
- Forbes
This Simple One-Page Method Made Warren Buffett Hundreds Of Billions
Warren Buffett's investment approach is famously simple. The Oracle of Omaha once suggested that investors who could only make 20 investments in their lifetime would "end up with better results" because "it would force them to focus on the best opportunities." This philosophy extends to his belief that any investor should be able to explain their investment thesis on a single sheet of paper. While Buffett has never published a literal template, decades of shareholder letters and public statements reveal the framework he uses. When evaluating companies, Buffett focuses on four key categories: business fundamentals, management quality, financial measures, and valuation. Here's what would appear on Warren Buffett's investment sheet: The Business: Can I Understand It? Buffett's first rule is simple: "Never invest in a business you cannot understand." The top of his sheet would contain a clear, one-sentence description of what the company does and how it makes money. Buffett restricts his investments to businesses he can easily analyze, avoiding companies with ambiguous operational philosophies. Key questions: Does this business have predictable earnings? Can I explain its competitive advantage in simple terms? Will this company's "competitive moat withstand the storms of time?" The Economics: Is It Profitable? Buffett prizes companies with high profit margins and focuses on Economic Value Added (EVA) calculations—essentially, profits after accounting for the cost of capital. His sheet would include key metrics like return on equity, debt levels, and cash generation. He seeks "exceptional businesses with strong competitive advantages at fair prices" rather than simply cheap companies. The numbers must demonstrate consistent profitability and efficient capital deployment. Management: Do They Act Like Owners? Buffett evaluates whether management has historically reinvested profits back into the company or redistributed funds to shareholders through dividends. He favors the latter, as it suggests management is focused on maximizing shareholder value. Transparency is crucial—"every company makes mistakes, but only those that disclose their errors are worthy of a shareholder's trust." His sheet would note whether management admits mistakes and communicates honestly with investors. The Price: Margin of Safety "The three most important words in investing are margin of safety," Buffett has said. As he explained at a 1996 shareholder meeting, "don't try and drive a 9,800-pound truck over a bridge that says 'Capacity: 10,000 pounds.' But go down the road a little bit and find one that says 'Capacity: 15,000 pounds.'" His sheet would compare the current stock price to his estimate of intrinsic value, ensuring he pays significantly less than what the business is worth. The Time Horizon: Forever "If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes," Buffett wrote in his 1996 shareholder letter. On another occasion, he quipped that "our favorite holding period is forever." His sheet would include a section asking: Would I be comfortable owning this entire business? Can this company grow earnings over the next decade? The Buffett Test: Sleep Well at Night When forced to choose, Buffett has said he "will not trade even a night's sleep for the chance of extra profits." The final test on his sheet: Does this investment allow for peaceful sleep, knowing the business fundamentals are sound regardless of short-term market fluctuations? This framework explains why Buffett's success "stems not from complex formulas or fancy models, but from adherence to fundamental principles." His one-sheet approach forces investors to focus on what truly matters: understanding the business, evaluating management, ensuring financial strength, demanding a margin of safety, and thinking like a long-term owner. As Buffett noted, "Success in investing doesn't correlate with IQ once you're above the level of 100." The key isn't intelligence—it's discipline. By limiting investment decisions to what fits on one sheet of paper, Buffett ensures he only invests in businesses he truly understands and believes in for the long term. The beauty of Buffett's method isn't its complexity—it's its simplicity. Anyone can apply this framework. The challenge isn't understanding the approach; it's having the patience and discipline to use it consistently, especially when the market is offering seemingly attractive alternatives that don't pass the one-sheet test.
Yahoo
25-05-2025
- Business
- Yahoo
Warren Buffett-led Berkshire Hathaway Has 21% of Its $276 Billion Portfolio in 1 Stock That's Up 644% in 9 Years
Buffett's purchase of this consumer stock might have been Berkshire's most lucrative investment ever. A strong brand, incredible profits, and a cheap valuation were likely the key factors attracting the Oracle of Omaha's attention. These days, the business faces headwinds that add lots of uncertainty for investors. 10 stocks we like better than Apple › In the past 60 years, Berkshire Hathaway has compounded shareholder capital at an unbelievable 19.9% annualized rate. Thanks to Warren Buffett's direction of the conglomerate, he has become an investing legend whose moves are watched very closely by the average investor out there. Maybe Berkshire's best investment decision came in the past decade, when it purchased a monster stock in early 2016 that is up 644% since the start of that year (as of May 23). Despite numerous sales in the past few quarters, this business still represents 21% of Berkshire's huge $276 billion portfolio. Investors need to know what company this is. Perhaps it deserves a closer look for your own portfolio. In a move unusual for Buffett, Berkshire allocated capital to a tech stock in the first quarter of 2016. The investment in Apple (NASDAQ: AAPL) ended up working out in remarkable fashion. The Oracle of Omaha understood first and foremost that Apple possessed one of the world's most powerful brands, a trait he had familiarity with. Apple's innovative culture, intense focus on providing an exceptional user experience, and well-designed products and services support how strongly it resonates with consumers across the globe. This continues to have a positive impact on the brand image. Keeping customers engaged and preventing them from leaving to rival products and services is something Apple excels at. It comes down to the rare combination of having hardware that's differentiated by its own software, which creates a robust ecosystem that keeps users locked in. Positioning itself at the premium end of the consumer electronics market also helps. Apple has historically benefited from having unrivaled pricing power, a characteristic Buffett believes is a clear indicator of a high-quality enterprise. That pricing power drives remarkable profitability for Apple. Buffett wants to own companies that are in pristine financial shape. In the past decade, Apple's net profit margin has averaged a superb 23%. This leads to the production of copious amounts of free cash flow, which the management team returns to shareholders in the form of dividends and stock buybacks. And of course, we can't forget how much 0valuation matters to Buffett's decision-making process. During the first three months of 2016, the period Berkshire made its first purchase in Apple, the stock traded at an average price-to-earnings (P/E) ratio of 10.6. That was a fantastic deal. It can provide investors with peace of mind knowing that the Oracle of Omaha owns a stock that you're interested in. However, I believe it's best to proceed with caution in this situation. Apple is dealing with some issues these days that are hard to ignore. First, it remains in the crosshairs of the ongoing tariff situation. President Trump just threatened a 25% tariff on imported iPhones if the business doesn't move production to the U.S. This adds a lot of uncertainty as to how things will shake out. What's more, Apple's growth has stalled, perhaps because consumers don't feel the need to upgrade to the newest devices as frequently. Revenue increased by just 2% in fiscal 2024. And according to Wall Street consensus estimates, sales will grow at an unimpressive compound annual rate of 5% between fiscal 2024 and fiscal 2027. This doesn't justify paying a P/E ratio of 30.5 for the stock, which is triple the valuation Buffett first paid. There are also concerns that Apple is lagging competitors in artificial intelligence (AI). It doesn't help that Apple's former chief design officer, Jony Ive, just sold his company io to OpenAI for $6.5 billion. OpenAI will now start to develop hardware devices that embed AI at their core, introducing competitive pressure for Apple. All of this is to say that investors can expect lower returns from Apple going forward than what was achieved in the past. Consequently, I don't view the stock as a smart buy today. Before you buy stock in Apple, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Apple wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $639,271!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $804,688!* Now, it's worth noting Stock Advisor's total average return is 957% — a market-crushing outperformance compared to 167% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy. Warren Buffett-led Berkshire Hathaway Has 21% of Its $276 Billion Portfolio in 1 Stock That's Up 644% in 9 Years was originally published by The Motley Fool Sign in to access your portfolio
South China Morning Post
19-05-2025
- Business
- South China Morning Post
Meet billionaire Warren Buffett's musician son Peter Buffett: the Stanford dropout scored a scene in Dances with Wolves, penned a book – and co-founded the NoVo foundation with his wife
Ninety-four-year-old billionaire Warren Buffett – CEO of Berkshire Hathaway and the sixth richest man in the world – just announced that he is finally stepping down from his company after 55 years. The world famous investor admitted to the Wall Street Journal last week that he's been slowing down in his old age, and has been forgetting names and struggling to be able to read newspapers clearly. 'I didn't really start getting old, for some strange reason, until I was about 90, but when you start getting old, it does become – it's irreversible,' he said. Just last year, the so-called Oracle of Omaha announced that his fortune would go to a charitable trust after his death, which his children – Susie, 71, Howard, 70, and Peter, 67 –will all be in charge of. Advertisement The Buffett siblings have also been tasked with donating the entirety of his fortune – around US$150 billion – to charities of their choice within 10 years. The children of billionaire Warren Buffett: Howard Buffett, Susie Buffett and Peter Buffett, in 2015. Photo: AP Photo And while Buffett senior is almost universally well-loved, his youngest son, Peter, has caused controversy in recent months for his transformation of the town of Kingston in New York, with some accusing him of contributing to gentrification in the area. Here's what we know about Peter Buffett, who just turned 67: He's a musician and author Musician and philanthropist Peter Buffett rehearses his performance at Hyatt Hotel in Sha Tin, Hong Kong, in 2009. Photo: Edward Wong At 19, Peter Buffett got an inheritance of US$90,000 in stock, cashed it in, dropped out of Stanford University and moved into a San Francisco flat to focus on his music career, per NPR. He started by making tunes for MTV and commercial music before releasing his first album, The Waiting, in 1987. He got his big break when he scored the fire dance scene in the Oscar-winning film Dances with Wolves (1990).
