Berkshire Hathaway isn’t just a stock—it’s a symbol of disciplined, long-term wealth creation. Built over nearly six decades by legendary investor Warren Buffett, Berkshire Hathaway has become the gold standard for buy-and-hold investing, attracting both novice investors and seasoned professionals who admire its performance, stability, and philosophy.
But Berkshire’s journey from a struggling textile company in the 1960s to one of the most valuable and admired corporations in the world didn’t happen by chance. It’s the result of a clear, consistent investment approach centered on value, quality, patience, and understanding what you own. Buffett didn’t just buy stocks—he bought businesses, and he held them through thick and thin.
In a world where social media, trading apps, and news cycles encourage fast moves and speculation, Berkshire Hathaway stands as a beacon of long-term thinking and compounding returns. This article will take you deep inside the company’s evolution, explore Buffett’s investing playbook, and explain why Berkshire Hathaway continues to be a model buy-and-hold stock today.
Whether you’re just starting your investing journey or looking to sharpen your strategy, you’ll learn actionable lessons from the Berkshire playbook—ones that can guide your portfolio for decades to come.
Table of Contents
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The Origins of Berkshire Hathaway
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Berkshire Hathaway and Buffett’s Value Investing Philosophy
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Why Berkshire Hathaway’s Conglomerate Model Works
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Berkshire’s Stock Portfolio: A Mini Mutual Fund
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Berkshire Hathaway’s Performance Through the Decades
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Why Berkshire Embodies the Buy-and-Hold Ideal
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What Investors Can Learn from Berkshire Hathaway
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Mistakes to Avoid When Investing Like Berkshire Hathaway
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Actionable Takeaways
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Conclusion
1. The Origins of Berkshire Hathaway
In 1965, Warren Buffett took control of a struggling textile company called Berkshire Hathaway, not realizing that it would become the centerpiece of his legendary career. The company was floundering in a dying industry, but Buffett used it as a vehicle to make investments in better businesses.
Buffett’s first major breakthrough came with the acquisition of National Indemnity, an insurance company that provided a steady stream of “float”—money that could be invested long before it had to be paid out in claims. This concept became the financial engine of Berkshire’s growth.
You can explore Buffett’s thoughts in detail through his annual letters to shareholders.
2. Berkshire Hathaway and Buffett’s Value Investing Philosophy
Buffett’s strategy is based on the principles of value investing—buying shares of fundamentally strong companies at a price below their intrinsic value.
Key principles include:
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Investing within your circle of competence
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Emphasizing a margin of safety
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Looking for businesses with durable economic moats
You can read more about these in Super Investor #26: Warren Buffett and Value Investing Strategies from the Masters of the Market.
Also explore:
For a current analysis of Berkshire’s financials and valuation, Morningstar provides comprehensive coverage.
3. Why Berkshire Hathaway’s Conglomerate Model Works
Unlike traditional companies, Berkshire Hathaway owns entire businesses in diverse sectors:
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GEICO (Insurance)
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BNSF Railway (Transportation)
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Berkshire Hathaway Energy (Utilities)
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See’s Candies, Dairy Queen, and many more
These companies throw off consistent profits, creating a self-sustaining ecosystem that allows Buffett to reinvest capital without paying dividends—compounding wealth year after year.
You can check the real-time price, financials, and news on Berkshire Hathaway (BRK.B) using Yahoo Finance.
4. Berkshire’s Stock Portfolio: A Mini Mutual Fund
Berkshire Hathaway also owns stakes in publicly traded companies, functioning almost like a mutual fund. Some of the most notable holdings include:
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Apple (AAPL) – Largest single equity holding
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Bank of America (BAC)
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American Express (AXP)
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Coca-Cola (KO)
These holdings have been held for years, reflecting Buffett’s belief in the power of compounding and his philosophy that “our favorite holding period is forever.”
Related Reading:
Investopedia breaks down Buffett’s core investing tenets in simple terms for those just starting out.
5. Berkshire Hathaway’s Performance Through the Decades
Here’s a brief look at how Berkshire Hathaway (BRK.A) has performed:
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1965–2023 CAGR: ~19.8% vs. S&P 500’s ~10.2% (including dividends)
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$1,000 invested in 1965: Over $36 million today
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Survived and thrived through every major downturn: 1970s stagflation, 1987 crash, 2000 dot-com bust, 2008 financial crisis, 2020 pandemic
External Resource: Morningstar’s Analysis of Berkshire Hathaway
6. Why Berkshire Embodies the Buy-and-Hold Ideal
Berkshire Hathaway buy and hold stock isn’t just a phrase—it’s a lifestyle.
Here’s why:
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Low turnover: Buffett rarely sells
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No dividends: All capital is reinvested
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Owner mindset: Buffett thinks like a business owner, not a trader
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Compounders inside: Every business under the umbrella grows independently
Want to build your own “mini-Berkshire”? Look for:
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High ROE
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Strong balance sheets
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Competitive advantages
Check out Characteristics of Quality Compounding Stocks
7. What Investors Can Learn from Berkshire Hathaway
There are actionable lessons here for every investor:
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Study companies like businesses, not ticker symbols
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Think long-term—even decades
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Ignore market noise and headlines
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Only buy what you understand
You can learn more about these practices here:
8. Mistakes to Avoid When Investing Like Berkshire Hathaway
Even fans of Buffett fall into traps:
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Trying to time the market
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Over-diversifying to the point of mediocrity
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Chasing hot tips or meme stocks
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Forgetting to study financials
Avoid FOMO and stay grounded with fundamental analysis:
9. Actionable Takeaways from Berkshire Hathaway
Here’s how to apply Berkshire’s success model:
✅ Focus on Businesses with Durable Moats
For new investors, a moat refers to a company’s ability to maintain a competitive advantage over time. Think of it like a protective barrier that keeps competitors from eating into profits. These advantages might include brand power, cost leadership, network effects, or regulatory licenses. Warren Buffett frequently refers to the importance of investing in companies with “wide economic moats.” For instance, Coca-Cola (KO) has maintained pricing power and global reach thanks to its brand loyalty and distribution network.
Experienced investors already understand this concept, but it’s critical not to overlook the durability of the moat. Ask yourself: Is this moat weakening or strengthening? For example, legacy media companies once had moats, but digital disruption eroded them. You want to own businesses where the moat is growing stronger over time.
You can deepen your understanding by reviewing:
👉 Understanding the Economic Moat
👉 Identifying a Moat
✅ Analyze Balance Sheets and Cash Flows
For beginners, analyzing a company’s balance sheet and cash flow statement can feel overwhelming—but it’s essential. These financials show you if a company is financially healthy or just burning cash. Look for low debt, high current ratios, strong free cash flow, and a history of reinvestment. Start with basics like understanding total liabilities vs. total assets or whether the company has more cash than debt.
More seasoned investors can dive deeper into quality indicators like return on invested capital (ROIC) and interest coverage ratios. These metrics help identify companies that not only make money—but make it efficiently. Buffett often praises businesses that “throw off cash,” like See’s Candies, which produces consistent profit with minimal capital needs.
To build this skill, check out:
👉 Balance Sheet Secrets
👉 How to Read a Balance Sheet Like Warren Buffett
✅ Invest in Companies with High ROE and Low Debt
Return on Equity (ROE) measures how efficiently a company uses shareholder equity to generate profit. As a rule of thumb, a high ROE—especially if it’s consistently above 15%—can signal strong business performance. New investors can look for stable, high-ROE companies that don’t rely heavily on borrowing to fuel growth. Low debt is essential because too much leverage can wipe out equity quickly in downturns.
Experienced investors should focus on quality of ROE—is it driven by real earnings or financial engineering? Berkshire Hathaway looks for businesses that produce great returns without overextending financially. A business with both high ROE and low debt is financially flexible, resilient, and efficient—just like many of the firms in Buffett’s portfolio.
This principle is key to long-term success and directly aligns with Buffett’s approach to buying businesses with consistent profitability.
✅ Hold Quality Companies for the Long Term
For new investors, the temptation to sell early—especially after a quick gain—is real. But most of Buffett’s wealth came from holding winners, sometimes for decades. Apple (AAPL) is a great example: Berkshire’s stake grew massively because they didn’t sell during market volatility. If the business fundamentals remain strong, the best move is often to do nothing.
For experienced investors, it’s about conviction and patience. Holding long term doesn’t mean ignoring market signals—it means filtering noise from substance. Long-term investors focus on business performance, not stock price volatility. Use annual reports and long-term trend analysis, not quarterly headlines, to make decisions.
Holding for the long term reduces taxes, trading costs, and cognitive errors—all of which eat into compounding returns.
Explore more here:
👉 The Power of Compounding
👉 Building a Portfolio of Compounding Stocks
✅ Reinvest Profits Instead of Chasing Dividends
It’s tempting to favor stocks that pay high dividends, especially for new investors looking for income. But Warren Buffett has built Berkshire’s wealth by reinvesting earnings into more profitable ventures—what’s known as retained earnings. Companies that can reinvest at high rates of return often outperform those that return cash to shareholders. Think of it like this: every dollar kept and reinvested at 15% earns more than a dollar returned and spent.
Experienced investors should consider the opportunity cost of dividends. Sure, they offer income—but could that money compound faster within the business? Apple and Alphabet (GOOGL), for example, historically reinvested cash for years before ever paying dividends—and delivered incredible returns. Buffett himself chooses companies based on how they use capital, not just how they distribute it.
This philosophy is why Berkshire Hathaway has never paid a dividend—and yet made thousands of investors multi-millionaires.
✅ Ignore the Noise—Think Like a Business Owner
For beginners, investing often starts with watching stock tickers, following financial news, or taking advice from social media. But Buffett urges investors to think like business owners, not speculators. This means understanding the underlying business—its customers, margins, risks, and growth potential—rather than obsessing over short-term price moves.
For experienced investors, this mindset guards against emotional reactions and market overreactions. Business owners don’t panic when their company’s market cap drops due to headlines—they focus on fundamentals and long-term execution. That’s why Buffett didn’t flinch during the 2008 financial crisis—he trusted his businesses and kept buying.
Staying grounded in business logic, not price movement, is a timeless edge in investing.
✅ Avoid Emotional Decision-Making
New investors often panic when markets fall or jump in too quickly when stocks soar. Emotional investing leads to buying high and selling low—the opposite of what successful investors do. Buffett’s advice? Be “fearful when others are greedy and greedy when others are fearful.” That means sticking to your plan and resisting herd behavior.
Experienced investors know that emotions are the biggest threat to returns—not market volatility. Create an investment checklist, set clear criteria for buying and selling, and review it regularly. It helps make rational decisions under stress and uncertainty.
To stay disciplined:
👉 Creating a Personal Investment Checklist
👉 How to Create Stock Picking Rules
10. Conclusion
Berkshire Hathaway is more than a successful company—it’s a masterclass in patient, rational, long-term investing. By sticking to a clear investment philosophy and focusing on value and quality, Warren Buffett built an empire that rewards shareholders decade after decade.
For investors looking for inspiration or a playbook, Berkshire Hathaway proves that with the right mindset, strategy, and discipline, buy-and-hold investing works.
Berkshire Hathaway buy and hold stock might just be the most powerful phrase in investing history—and one that you can replicate in your own way.
Happy Investing!