Warren Buffett, CEO of Berkshire Hathaway, reflects on his investment strategy in the 1981 shareholder letter. He emphasizes the importance of acquiring high-quality businesses at reasonable prices, rather than trying to transform struggling companies into successes. This philosophy has guided Buffett’s approach to investing over the years, focusing on long-term value creation.

Buffett’s shift from seeking “cigar butt” investments to high-quality businesses with durable competitive advantages has proven successful. He acknowledges the challenges of turning around struggling companies and instead opts for investing in fundamentally sound businesses with strong management. This strategy has been a key driver of Berkshire Hathaway’s long-term success.

Investing in minority stakes in great companies has been another successful strategy for Buffett. By buying fractional interests in well-established companies at discounted prices, Berkshire Hathaway has generated significant value for shareholders. This approach allows for participation in the success of these companies without the risks associated with full takeovers.

Buffett’s advice on disciplined investing in high-quality businesses remains relevant in today’s market. He cautions against the allure of turnaround stories and high-premium acquisitions, emphasizing the importance of patience, discipline, and a focus on intrinsic business quality for long-term success. Buffett’s experience serves as a reminder of the enduring value of sound investment principles in a world full of opportunities and risks.

Read more at Yahoo Finance: Warren Buffett’s Favorite Money-Making Strategy is ‘Purchasing Fractional Interests in Easily-Identifiable Princes at Toad-Like Prices’