THE LEGEND OF WARREN BUFFETT 👓
THE NUMBER
> $100 billion
Berkshire Hathaway Has Made A Pre-Tax Profit Of More Than $100 Billion On Its Apple Investment.
Berkshire Hathaway began buying Apple in the first quarter of 2016, when it was already the world’s most valuable company, and the shares have since soared 1,080% over the past decade (as of Nov. 3). That more than $100 billion gain makes it arguably the most lucrative public equity investment in history, and it showed that Warren Buffett could widen his circle of competence and bet big on an opportunity that only looks obvious in hindsight. The decision to start trimming the stake in Q4 2023 looks premature, though, as the stock has climbed 85% over the past three years.
THE VISUAL
Note: Returns start Oct. 1, 1964.
Source: The Blind Spot / Data: 2025 Berkshire Hathaway Shareholder Letter
Under Warren Buffett’s capital allocation, Berkshire Hathaway compounded at nearly 20% a year for six decades, even though the shares have trailed the S&P 500 index (dividends reinvested) over the past 10 years. Its worst year was 1974, when the stock fell 49%. Even that drawdown is nowhere near the decline it would take to erase a cumulative 6,099,294% return.
THE QUOTE
❝
“An investor needs to do very few things right as long as he or she avoids big mistakes.”
Warren Buffett, Then-Chairman and CEO Berkshire Hathaway · 1992 Shareholder Letter
These simple but incredibly powerful words reveal Warren Buffett’s belief that successful investing doesn’t require genius-level intelligence. Investing is one of the few fields in which average people can do better than the experts, as long as they don’t fool themselves into thinking they’re smarter than they really are. Temperament matters more than IQ; the edge comes from knowing what you don’t know.
THE MENTAL MODEL
Compounding
Applied To The Legend of Warren Buffett
Warren Buffett’s success is the clearest case for the power of compounding, as steady returns that are sustained for decades can add up to extraordinary wealth. Remarkably, about 99% of his $158 billion net worth came after his 65th birthday. In investing, staying in the game matters more than swinging for the fences.
THE QUESTION
Was Warren Buffett’s edge a repeatable method, or did it depend on conditions that no longer exist?
(My take italicized in bold)
Repeatable
Conditions-dependent
Both: Patience, discipline, and a focus on business quality still create a real edge. However, the conditions that amplified his results, such as decades of falling interest rates, less efficient markets, and float-funded leverage, can’t be repeated. While investors can copy the process, they shouldn’t expect Warren Buffett-sized returns.
Reply with your answer, and why
Until next week,
Neil Patel
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