Warren Buffett: The Sage of Investing and His Impact on Global Financial Markets

Warren Buffett was born on August 30, 1930, in Omaha, Nebraska, USA. From a young age, he showed a great passion for numbers and business, starting by buying packs of cola and selling them to neighbors for a small profit. As a teenager, he made his first stock market investment at age eleven, buying three small shares. Buffett was influenced by his mentor Benjamin Graham during his studies at Columbia University, where he learned the fundamentals of value investing, which later became the cornerstone of his investment philosophy. After several ventures in founding small businesses and managing family funds, Buffett established his first investment partnership in the mid-1950s, marking the start of an exceptional career in finance and business.

Buffett’s story with Berkshire Hathaway began when he purchased a stake in the company, which operated in textiles in the 1960s. He noticed that the company’s stock was trading below the value of its actual assets, prompting him to acquire the entire company. However, as the textile sector declined, Buffett decided to transform Berkshire into a holding investment platform, using its profits to expand into new sectors. Over the following decades, Berkshire acquired companies in insurance, energy, transportation, heavy industry, and retail, becoming one of the world’s largest investment companies with a market capitalization exceeding $1 trillion in 2023-2024.

The foundation of Warren Buffett’s investment philosophy is the value investing principle he learned from Benjamin Graham. Buffett focuses on buying stakes in companies with strong financial fundamentals, such as stable cash flows, low debt, and highly efficient management. He seeks companies trading below their intrinsic value and avoids short-term speculation or investing in businesses he does not understand. One of his famous sayings is: "Never invest in a business you cannot understand," explaining his long-standing avoidance of technology stocks before entering Apple and his distance from cryptocurrencies. Buffett also emphasizes holding investments for long periods, relying on the power of compound earnings growth.

Berkshire Hathaway is now recognized as one of the largest holding companies in the world. By 2024, its market capitalization exceeded $1 trillion, with cash reserves surpassing $150 billion. Berkshire’s investments span insurance (GEICO, General Re), energy (Berkshire Hathaway Energy), transportation (BNSF), industry (Precision Castparts, Marmon Group), and major stakes in listed companies such as Apple and Coca-Cola. The company does not pay cash dividends but reinvests its earnings to expand operations or repurchase its own shares. Its price-to-earnings (P/E) ratio remains reasonable compared to technology companies, attributed to stable revenues from traditional sectors with steady returns.

A key feature of Buffett’s approach is maintaining large cash reserves, enabling him to seize investment opportunities during economic downturns or crises. By 2023-2024, Berkshire’s cash liquidity exceeded $150 billion, an unprecedented figure among investment companies. This approach provides high resilience in facing financial crises or entering major acquisition deals when asset prices fall. Buffett also focuses on risk management by diversifying the portfolio across multiple sectors and avoiding high-risk or poorly understood investments, contributing to the company’s stable performance even during periods of economic volatility.

Buffett’s investments through Berkshire Hathaway are highly diversified, but some companies hold a prominent place in the portfolio, including:
- Apple Inc: One of Buffett’s largest investments, exceeding $50 billion in 2023.
- Financial Services: Significant stakes in banks such as Bank of America and credit card companies like American Express.
- Consumer Goods: Long-term investments in companies like Coca-Cola and Kraft Heinz.
- Energy and Transportation: Full ownership of companies such as BNSF (railroads) and Berkshire Hathaway Energy.
Buffett focuses on companies with strong brands, stable cash flows, and reliable management.

Buffett’s position on dividend distribution has long been a topic of debate among investors. He believes that retaining and reinvesting earnings within the company provides higher long-term returns for investors compared to distributing them as cash dividends. For this reason, Berkshire Hathaway has not paid cash dividends for decades, always preferring to use liquidity for acquiring new companies or repurchasing its own shares. Buffett sees this strategy as enhancing share value, and that companies capable of efficiently reinvesting their profits achieve sustainable growth for shareholders.

Buffett’s philosophy enjoys wide attention in Saudi investment circles, where many individual and institutional investors—such as the Public Investment Fund—draw inspiration from his approach to company evaluation and portfolio diversification. Reports indicate that the Saudi sovereign fund has adopted a tactic similar to Buffett’s strategy when acquiring stakes in European oil companies, despite differences in diversification levels. Saudi investors tend to study company fundamentals, especially in banking, telecommunications, and energy sectors, applying Buffett’s advice on investing in companies with regular returns and avoiding excessive speculation in trending stocks.

Warren Buffett is unique in his style, but there are global investors who share some similarities, such as Charlie Munger (his long-time partner), Bill Gates (his philanthropic partner), and companies like Markel Corporation, which follows a diversified portfolio model. Conversely, there are major investors with contrasting approaches, such as Elon Musk, who focuses on innovation and technology, or venture capital funds that rely on speculation and quick-return deals. Comparing Buffett to these investors highlights the importance of a clear and consistent strategy over the long term, away from rapid reactions to market fluctuations.

Berkshire Hathaway includes many subsidiaries across diverse sectors. Notable examples:
- Insurance: GEICO, General Re, Berkshire Hathaway Reinsurance Group.
- Energy: Berkshire Hathaway Energy, with investments in electricity, natural gas, and renewable energy.
- Transportation: BNSF Railway, the largest railroad network in North America.
- Industry: Precision Castparts (aerospace components), Marmon Group (diversified industries).
- Retail: See’s Candies, Nebraska Furniture Mart.
Buffett evaluates these companies based on their ability to generate cash flow, operational efficiency, and sustainable competitive advantage.

Berkshire Hathaway’s performance has continued to improve in recent years. In 2024, the class A share price hovered around half a million dollars, while the class B share traded at several hundred dollars. The company maintained a market capitalization close to $1 trillion and a reasonable P/E ratio compared to the sector. The company did not pay cash dividends, continuing its policy of reinvesting profits and share buybacks. It recorded continuous revenue growth from insurance and energy sectors and succeeded in maintaining a high profit margin thanks to asset diversification and efficient financial management.

Warren Buffett is keen to participate in public discussions about the US and global economy during his company’s annual meetings. In 2024, Buffett pointed to challenges such as inflation and moderate growth, warning against following speculative trends in cryptocurrencies and unresearched assets. He stresses the importance of thorough financial analysis and avoiding investment decisions based on emotions or rumors. Buffett also emphasizes that investing in companies with strong fundamentals is the best way to face market volatility.

Beyond the world of finance, Warren Buffett is known for his humility and simple lifestyle, still living in his old Omaha home. For years, Buffett has pledged to donate most of his wealth to charity and co-founded the Giving Pledge with Bill Gates, encouraging the wealthy to donate a significant portion of their fortunes. By 2024, Buffett had donated over $50 billion to support education, health, and poverty alleviation. He believes that true success is not measured by money alone, but by the positive impact one leaves on their community and life.

Buffett’s experience summarizes several important lessons for every investor:
1. Focus on companies with strong fundamentals and clear competitive advantages.
2. Avoid short-term speculation and invest in what you know and understand well.
3. Be prepared to withstand market volatility and avoid emotional decisions.
4. Reinvest profits to achieve long-term compound growth.
5. The importance of continuous learning and openness to new ideas without blindly following every trend.
These principles have contributed to building one of the most successful investment careers in financial market history.