Warren Buffett reveals the ‘secret ingredient’ to successful investing – Executive Summary

in your Annual letter Warren Buffett revealed to Berkshire Hathaway investors the “secret ingredient” to successful investing.

On this subject, the millionaire was clear: everything depends on the weather. Buffett cites the example of Coca-Cola and American Express, two companies in which Berkshire Hathaway has held shares for nearly 30 years, and which reported profits of more than $1 billion in 2022, to illustrate that “weeds wither as flowers bloom.” A few winners are enough to work wonders. To which he adds that it “also helps to start early and live to be 90”.

However, not everything was successful. As he points out in that letter, in the nearly 60 years he’s been at the helm of Berkshire, most of his investment decisions haven’t been very good, but rather “average,” happily “helped by large doses of luck.” “Our satisfactory results are the result of dozens of really good decisions, one every five years, and a sometimes forgotten feature that favors long-term investors like Berkshire,” Buffett explains.

Looking ahead, Buffett also stressed that Berkshire “will always have plenty of cash and US Treasuries, along with a wide range of businesses.”

This reality will prevent “behaviors that can lead to uncomfortable cash needs at inappropriate times, including unprecedented financial panic.” And when the time comes for Greg Appel, the current CEO of Berkshire Hathaway Energy, to succeed him at the helm of the group, shareholders will “continue to save and thrive by locking in the dividend” because “there will be no purpose.”

Finally, the millionaire wanted to include in this year’s speech one of the rules of Charlie Munger, vice president of the group, which he applies himself: “Find a very smart partner, preferably a little older – and then listen to him and pay close attention to what he says.”

Warren Buffett’s company recorded losses of $22.819 million in 2022