In mid-October 2008, with blood all over the streets, Warren Buffett penned a New York Times column: ‘Buy America. I am.’ Amid mass hysteria, the Oracle of Omaha made another contrarian move in a career defined by them. He predicted some of the U.S.’s most outstanding companies would set profit records in five, 10, and 20 years. It proved to be a dead-on forecast, as the March 2009 low marked the beginning of a long-standing bull market. A simple rule dictated his buying then, as it always has: Be fearful when others are greedy, and be greedy when others are fearful. Over the past 80 years, the mantra has helped make him the richest investor.
By age 30, Buffett had amassed a net worth of $1 million, or $9.3 million adjusted for inflation. He’s invested through wars, bubbles, panics, recessions, and political environments. He’s made nearly all of his wealth (roughly $113 billion) after his 65th birthday, a masterclass in the power of compound interest. In an era of constant notifications, price reminders, and trading apps, Buffett’s approach continues to stand out. His company, Berkshire Hathaway, has delivered a compounded annual gain of 19.8% since 1965.
“If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes,” Buffett has said.
On May 6, thousands of investors will flock to Omaha for Berkshire Hathaway’s Annual Shareholder Meeting to see Warren Buffett, 92, and his partner, Charlie Munger, 99, discuss markets, investing, and life. Ahead of the meeting, we spoke with bestselling author Robert Hagstrom, whose superb book, The Warren Buffett Way, has sold more than 1 million copies. It explores Buffett’s process, and how he became a billionaire and investment sage by looking at companies as businesses rather than prices on a stock screen. How to hold through turbulence? How to identify excellent businesses worth holding for a decade or more? Behaving rationally in the face of the ups and downs of the market has been central to Buffett’s success.
Here’s our interview with Hagstrom, the Chief Investment Officer of EquityCompass and Senior Portfolio Manager of the Global Leaders Portfolio. It’s edited lightly for clarity.
Warren has always been known as a stock guy, but he’s really a business buyer. How can we think about that?
Warren says, “I’m a better investor because I'm a business person, I'm a better business person because I'm an investor.” They work together. When you’re a business-driven investor, a lot of stuff falls away. It just doesn’t matter what someone says will happen with the economy. People ask for speculative comments or answers, but you can say, “I have no idea what the market’s going to do next week or month.” That’s not a good answer for many people. They’re unsettled with the idea that the future is unknowable.
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