Legendary Investor Warren Buffett Turns 94 Today: Here Are Some of His Investment Rules

Julie Bang / Investopedia

Key Takeaways

• Legendary value investor and CEO of Berkshire Hathaway Warren Buffett turned 94 on Friday.
• Buffett’s Berkshire Hathaway hit a market capitalization of $1 trillion earlier this week, making it the first U.S. company outside of the tech sector to hit that milestone.
• Buffett’s investment philosophy is based on the principle of acquiring stock in what he believes are well-managed, undervalued companies.

Warren Buffett, the legendary value investor known as the “Oracle of Omaha” and longtime CEO of Berkshire Hathaway (BRK.A, BRK.B), turned 94 on Friday. Berkshire Hathaway hit a market capitalization of $1 trillion earlier this week, making it the first U.S. company outside of the tech sector to hit that milestone, and Buffett played a key role in making Berkshire the financial giant it is today.

Here are some of the investing rules Warren Buffett is most famous for.

‘Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.’

One of Buffett’s most famous sayings is “Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.”

Buffett hasn’t always followed his own advice in this regard, notably losing about $25 billion in the 2008 financial crisis—though he’s known for taking a risk-averse approach, and only investing in companies that he thoroughly researches and understands.

‘Our Favorite Holding Period Is Forever’

Also known for his long-term approach to investing, Buffett’s investment philosophy is based on the principle of acquiring shares of what he believes are well-managed, undervalued companies—and holding them for an extended time.

Buffett has famously said that you shouldn’t own a stock for 10 minutes if you don’t feel comfortable owning it for 10 years. Some of Berkshire’s largest holdings are ones the firm has maintained a stake in for several decades.

Recent Changes to Berkshire Hathaway’s Portfolio

Some of Berkshire’s recent changes to its portfolio in the second quarter included adding stakes in beauty products retailer Ulta Beauty (ULTA) and aerospace and electronics manufacturing company Heico Corp. (HEI).

Meanwhile, Berkshire has significantly trimmed its position in Apple (AAPL), though the tech giant still represents Berkshire’s largest holding.

Berkshire also reduced its holdings in Bank of America (BAC) in July after the bank’s shares surged following an earnings beat.

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Conclusion

Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, celebrated his 94th birthday. Buffett’s investment philosophy, based on acquiring shares of well-managed, undervalued companies and holding them for the long term, has made him one of the most successful investors in history. Despite occasional losses, Buffett’s adherence to his investment rules has allowed him to build Berkshire Hathaway into a trillion-dollar company. As investors, we can learn valuable lessons from Buffett’s approach and apply them to our own investment strategies.