On July 3, 2006, Warren Buffett drove to the U.S. Financial institution department in downtown Omaha, walked in, went downstairs, and opened his safe-deposit field. He eliminated a chunk of paper, a certificates for 121,737 shares of Berkshire Hathaway inventory. It was value about $11 billion. The cash from the sale of these shares, a fraction of his Berkshire holdings, could be the primary tranche in his program to give away nearly all his wealth.
That financial institution go to was a bookend in Buffett’s life, a fittingly monetary sign occasion within the life story of the person extensively considered the world’s best investor. He instructed Fortune on the time that it reminded him of a go to to that very same financial institution, then known as Omaha Nationwide, nearly 70 years earlier, an occasion that on reflection appears the opposite bookend in Buffett’s monetary life. He was 6 years outdated. His father arrange a financial savings account for him and put $20 in it.
Between these two financial institution visits, Buffett created Berkshire Hathaway, made it America’s largest conglomerate, and have become globally well-known. On Could 3, he signaled the top of that exceptional run, asserting that he would hand the CEO reins to his longtime lieutenant Greg Abel on the finish of this 12 months.
Buffett shall be leaving with an unmatchable document. He achieved a 19.9% common annual return to Berkshire shareholders from 1965 by 2024, or about 5.5 million % in complete for unique buyers, together with himself. By the 2020s his wealth would have reached over $200 billion, making him the world’s richest individual—if he hadn’t given away a lot of his inventory.
Thus the plain questions which have transfixed buyers for many years: How did Buffett develop $20 to nicely over $200 billion? Why weren’t others in a position to do it? How did he discover the key? What’s the secret?
It’s tempting to search for solutions in the aphorisms Buffett coined so memorably: “Be fearful when others are greedy and greedy when others are fearful.” “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” “Only buy something you’d be perfectly happy to hold if the market shut down for 10 years.”
He believed them intensely, however they aren’t the important thing to his success. The hot button is, he by no means stopped searching for the important thing. When requested to clarify his success, he usually mentioned it was merely that he was “rational.” It sounds really easy. However rational individuals change their beliefs when actuality dictates, and most of us discover doing so excruciatingly exhausting.
Buffett might do it. His maxims sound as if he discovered them engraved on a stone pill, however in actuality he discovered them. He was only a child when he began studying the exhausting means. As a teenage investor he tried technical evaluation, learning charts of inventory costs searching for “candlesticks” or “bearish divergence signals.” That didn’t work, so he gave it up. He tried what almost each investor tries, timing the market, selecting simply the proper moments to purchase and promote. That didn’t work both, so he left it behind.
He even made irrational, emotional choices. At age 11, in 1942, he purchased his first inventory: three shares of Cities Service Most well-liked for himself and three shares for his sister Doris. (Cities Service was the oil and gasoline firm now generally known as Citgo.) The value shortly dropped. When it lastly recovered and rose simply above the worth he had paid, he offered—and the worth saved rising, quickly quintupling. He by no means forgot that he ought to ignore the worth he had paid, which he couldn’t change, and focus solely on the corporate’s future. He discovered additionally that if he was going to speculate another person’s cash, he had higher be extremely assured he might do it nicely. His biographer, Alice Schroeder, wrote that Buffett “would call this episode one of the most important of his life.”
Most individuals discover it excruciatingly exhausting to alter their beliefs when actuality dictates. Buffett might do it.
Years later, as a profitable fund supervisor with rather more at stake, he dared to alter his philosophy of investing but once more. At Columbia Enterprise Faculty from 1949 to 1951, Buffett had turn into a faithful pupil of Benjamin Graham, coauthor of the well-known investing information Safety Evaluation, who suggested shopping for shares solely at excessive discount costs based mostly on monetary ratios. However Buffett’s enterprise associate, Charlie Munger, satisfied him that essentially good companies could possibly be value shopping for even when they weren’t screaming bargains. In 1972, Buffett purchased See’s Candies for thrice e book worth—heretically costly, to Grahamites—and by no means appeared again. See’s stays an important performer for Berkshire.
He by no means stopped difficult his beliefs. He noticed the dotcom bubble of the late Nineties for what it was and mentioned so. He wouldn’t spend money on web shares, he defined, as a result of they had been inconceivable to worth. Silicon Valley cheerleaders shook their heads smugly, lamenting that outdated Warren had let the tech revolution cross him by.
When the crash hit, he had each proper to be smug himself, however he later discovered a a lot better riposte. In 2016 he began shopping for into tech royalty: Apple, which grew to be the biggest holding in Berkshire’s inventory portfolio.
Wall Avenue analysts had usually warned that Apple inventory was overpriced. Ben Graham would have disapproved. However Buffett noticed an extremely good enterprise—enormously worthwhile, with an enormous aggressive “moat” round its merchandise. He instructed his shareholders in 2023, “It just happens to be a better business than any we own.” (Berkshire offered the vast majority of its Apple shares over the course of 2024, nevertheless it remained the corporate’s largest fairness holding on the finish of the 12 months.) At Berkshire’s current annual assembly, Buffett mentioned, “I’m somewhat embarrassed to say that [Apple CEO] Tim Cook has made Berkshire a lot more money than I’ve ever made for Berkshire Hathaway.”
Whereas all the time rethinking methods to make cash, Buffett was additionally rethinking methods to give it away. For years he had deliberate to begin donating his wealth (“more than 99%” of it, he mentioned) at his demise by a basis he had arrange. However in 2006, at 75, nicely previous the age when most CEOs have retired, he modified his thoughts. He would as a substitute begin donating it instantly, largely to the Invoice & Melinda Gates Basis, with smaller quantities going to his unique basis and the foundations arrange by every of his three grownup kids. (Invoice Gates is now making a exceptional dedication with the assistance of these donations, and with Buffett’s blessing; see “Invoice Gates’ $200 billion moonshot: Inside the largest guess on humanity a philanthropist has ever made“)
Why the shift? As soon as once more he formed his views to suit actuality. He had been a superb good friend of the Gateses’ for 15 years and admired their work on the basis, which was sufficiently big to deal with the large sums he could be sending to them. They had been additionally considerably youthful than himself. His conclusion, as he defined it to Fortune, was pure Buffett: “What can be more logical, in whatever you want done, than finding someone better equipped than you are to do it?”
That’s what introduced him to his safe-deposit field in downtown Omaha, by himself, eradicating a chunk of paper value $11 billion. He would quickly ship it to the Gates Basis. We can’t know his feelings at that second, as he mentioned goodbye to a good portion of his life’s work, nevertheless it’s troublesome to imagine that he swallowed exhausting or trembled. Extra seemingly he was smiling.
Three nice pivots
Warren Buffett has been higher than most at altering course—a proven fact that explains each his success and his longevity.
Giving up “cigar butts”
Buffett started his profession as a disciple of Benjamin Graham, who beneficial shopping for shares solely at rock-bottom costs. However Buffett’s enterprise associate, Charlie Munger, satisfied him that some sturdy corporations had been value shopping for even after they weren’t bargains— paving the way in which for a few of Buffett’s greatest investments.
Catching up on tech
At the same time as he constructed a peerless monitor document, Buffett averted investing in tech corporations, arguing that their future worth was inconceivable to estimate. However he ultimately got here to acknowledge Apple, underneath CEO Tim Prepare dinner, as a historically nice enterprise with an enormous aggressive “moat.” It grew to become one in all Berkshire Hathaway’s top-performing holdings.
Giving to the higher giver
Buffett had lengthy deliberate to provide away most of his wealth after his demise. However the accomplishments of the Invoice & Melinda Gates Basis modified his thoughts—and attracted some $40 billion of his cash. As he instructed Fortune, “What can be more logical, in whatever you want done, than finding someone better equipped than you are to do it?”
This text seems within the June/July 2025 problem of Fortune with the headline “Warren Buffett’s secret to success: He knew how to change his mind.”
This story was initially featured on Fortune.com
