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First of all, happy New Year!
The start of 2026 obviously marks the beginning of something new (and hopefully fantastic). But this year, in particular, also marks the end of an era.
By now, you’ve probably seen the news: as of today, Warren Buffett is no longer at the helm of Berkshire Hathaway, officially closing the book on a 55-year run as the company’s CEO.
On one hand, it’s hard not to feel a little sad about that. For many of us, Buffett isn’t just an investor we look up to — he’s been a dependable guide on the journey to becoming better investors, better thinkers, and better human beings.
On the other hand, I can’t help but feel incredibly fortunate. We got to grow up as investors during a time when both Warren and Charlie were still around, still investing, and still teaching (and learning themselves). And I think we’re better off for it.
Even without ever meeting him, he’s taught millions of people about the business of investing, building wealth, and living an ethical life. He took ideas that are often made unnecessarily complicated and distilled them into lessons that were simple, clear, and timeless.
It’s often said that reading Warren’s annual shareholder letters will teach you more about business than getting an MBA. I’ve always loved that line, especially considering I never finished college.
For a while now, I’ve been taking notes on his annual letters. You can read my full notes here, broken down by year. And while I could easily pull a dozen great quotes to share with you today, there’s one in particular that really stands out.
It comes from Warren’s first annual letter to shareholders in 1977. More than almost anything else he’s written, I think this quote perfectly captures both the essence of investing and the way Warren and Charlie thought about owning businesses.
We select our marketable equity securities in much the same way we would evaluate a business for acquisition in its entirety. We want the business to be (1) one that we can understand, (2) with favorable long-term prospects, (3) operated by honest and competent people, and (4) available at a very attractive price. We ordinarily make no attempt to buy equities for anticipated favorable stock price behavior in the short term. In fact, if their business experience continues to satisfy us, we welcome lower market prices of stocks we own as an opportunity to acquire even more of a good thing at a better price.
This is basically the Berkshire Hathaway blueprint for investing. There’s a lot packed into this quote, so let’s break it down piece by piece.
First and foremost, the business has to be one you understand. If you don’t understand how it makes money, then you won’t be able to accurately wrap your head around its risks and competitive advantages.
Second, the business needs to have favorable long-term prospects. That doesn’t mean every year will be perfect, but it does mean the company should be positioned to be stronger five or ten years from now than it is today. A business that isn’t growing is declining, and that’s not a great foundation for building wealth over the long-term.
Third, you need to trust the people running the company. It seems like such a simple concept, but it’s often overlooked.
If management isn’t honest, transparent, and aligned with shareholders, nothing else really matters. You’re handing your hard-earned money to someone else, and if you don’t trust them with it, then you shouldn’t invest in it.
And finally, price still matters.
Even the best businesses can be bad investments if you pay too much for them. Buying at an attractive price gives you a margin of safety, which allows for some wiggle room if things don’t go the way you plan.
And if you’re truly investing for the long term (which you should be), unexpected risks will undoubtedly show up along the way.
There’s also something important in this quote that isn’t stated outright, but is clearly implied: When you buy a stock, you are buying a business. The two are one and the same, and it’s easy to forget that.
Many people treat stocks like they’re spinning a roulette wheel, but at the end of the day, stock investing is business ownership. Maintaining that mindset matters much more than whatever the share price is doing this week, this month, or this year.
If you take anything away from Warren Buffett’s career, let it be this: Invest like an owner, think long term, and let time do the heavy lifting.
With all of that said, now I want to hear from you: What’s your favorite Buffettism? Let me know in the comments below!
