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- Warren Buffett Helps Launch the First Nonprofit IPO 1 August 2007
- $68B Slim is 'world's richest man' 1 August 2007
- Buffett cuts back PetroChina stake 1 August 2007
Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks. 
Investment
Warren Buffett turned Berkshire Hathaway from a struggling textile company into a multi-billion dollar holding company. When Buffett took control of Berkshire, the corporate net worth was $22 million. Forty years later, it has grown to $69 billion. Buffett’s investment philosophy of investing into companies that are easy to understand and priced below its intrinsic value allowed Berkshire to earn a phenomenal annual return rate of over 25% for its shareholders. An investment of $1,000 in 1965 would approximately be worth $2.8 million today.
Buffett would not have been this successful if not for the teaching and mentoring of Benajmin Graham. After Graham’s death in 1976, Buffett never missed an opportunity to acknowledge his intellectual debt he owed to Graham. Graham is considered by many as the godfather of value investing, the investment philosophy Buffett uses today.
Value investing is a strategy of selecting stocks that trade for less than their intrinsic value. The stock market overreacts to good and bad news, causing stock prices to move in a direction opposite to a company’s real long-term value. It is during this time that value investors, like Buffett, move in and purchase a company’s stock. Though there are many ways in valuing a business, Buffett says the best way to value a business is by totaling the net cash flows – or owner earnings – expected to occur over the life of the business minus an appropriate interest rate.
In addition to value investing, Buffett says there are no fundamental difference between the purchase of an entire business and stock in a company. Buying stocks means buying a fraction of a business, which requires the same research discipline. The owner-oriented approach of investing engage the investor in learning more about the company and how it operates. Buffett looks for companies that he understands, has consistent earnings history with favorable long-term prospects, good return on equity with little debt, honest and competent management, and attractive prices.
