Warren Buffett Advice: Why You Should Pick Businesses, Not Stocks

Can you beat the averages? Warren Buffett can. What can mere mortals learn from his success?

Warren Buffett, CEO of Berkshire Hathaway
(Image credit: Getty Images)

Warren Buffett, the chairman of Berkshire Hathaway (BRK.A), is the most successful investor of our time. His daughter, Susan, worked as my assistant when I was the publisher of a magazine 40 years ago. Just before she got married, Susie told me she worried that her fiancé’s parents had bought a couple of shares of Berkshire stock — and what if it tanked? At the time, the price was about $1,000 a share. Today, it’s $507,000 a share. I hope the in-laws hung on.

In his latest annual report, Warren Buffett calculates that the average yearly gain in market value from his acquisition of Berkshire in 1965 through the end of 2022 was 19.8%, compared with 9.9% for the S&P 500 — an astounding difference, matched by no one of whom I’m aware. And Berkshire beat the market in two-thirds of the years. 

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Company SymbolPrice YieldPrice-Earnings RatioMarket Value (billions)Total ReturnRow 0 - Cell 7
Row 1 - Cell 0 Row 1 - Cell 1 Row 1 - Cell 2 Row 1 - Cell 3 Row 1 - Cell 4 Row 1 - Cell 5 1 yr3 yrs *
American Express AXP $174 1.4%16 $12926.9%23.6%
Apple AAPL1940.5293,05142.6 29.2
Bank of AmericaBAC 293.18229–5.09.4
Berkshire Hathaway BBRK.B3412274524.924.1
ChevronCVX 1573.81029412.724.9
Coca-Cola KO 603.123260–1.413.5
Moody'sMCO 3480.9366428.99.0
Occidental Petroleum OXY 591.211520.948.3
Verisign VRSN226352435.03.0
S&P 500Row 11 - Cell 1 Row 11 - Cell 2 Row 11 - Cell 3 20Row 11 - Cell 5 19.614.6

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James K. Glassman
Contributing Columnist, Kiplinger's Personal Finance
James K. Glassman is a visiting fellow at the American Enterprise Institute. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence.