Business
How Warren Buffett Changed the Way Investors Thought of Investing
Warren E. Buffett’s approach to investing is deceptively simple.
“Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices,” he once wrote to shareholders of Berkshire Hathaway, his business conglomerate.
This method — known as value investing — had existed long before Mr. Buffett, now 94, began his career. But no one did it as well — or for as long — as he did. And in the process, he influenced generations of financiers, including Wall Street hedge fund moguls, and promoted the now-common advice about investing for the long term.
Over the 60 years that Mr. Buffett has controlled Berkshire Hathaway, he used value investing to turn a failing textile manufacturer into a $1.1 trillion conglomerate, corporate takeover machine and microcosm of the U.S. economy. One of America’s largest railroads? Owned by Berkshire. The biggest shareholder in American Express and Coca-Cola? Berkshire, too.
Mr. Buffett amassed a Midas-like personal fortune, valued at about $168 billion, and along the way became the avuncular avatar of American-style capitalism who was called upon for help by both corporate executives and government officials in the 2008 financial crisis.
That unparalleled success earned Mr. Buffett millions of admirers around the world. Tens of thousands of them were on hand at Berkshire’s annual meeting in Omaha on Saturday when he declared he finally planned to step down as chief executive.
His announcement was greeted with surprise and then minutes of thundering applause from shareholders — many of whom became millionaires by owning Berkshire stock and hang onto his every financial aphorism.
“I tell people everything I know about investing I learned from Warren Buffett,” Bill Ackman, the billionaire hedge fund manager who was in the crowd, said in an interview after Mr. Buffett’s announcement.
Mr. Buffett has acknowledged that his enormous fortune owes no small debt to pure luck. As he has put it, he won “the ovarian lottery” by being born in the United States, when stock markets were primed to create one of the biggest economic booms in modern history.
He learned about stock picking from a pioneer of value investing, Benjamin Graham, who was his professor at Columbia University. With crucial advice from Charles T. Munger, a fellow Nebraskan who became his longtime business partner, Mr. Buffett turned Berkshire, which he bought control of in 1965, into the best-possible argument for the discipline.
But few lived and breathed the discipline as he did, reading corporate balance sheets for research — and fun — from dawn to dusk.
Mr. Buffett then put that knowledge to work in several ways. Berkshire bought a vast array of successful businesses, including See’s Candy, Fruit of the Loom and the private jet service NetJets. But the most transformative were the acquisitions of insurers like National Indemnity and Geico, which sat on premiums that customers paid but hadn’t yet claimed.
That cash, known as the “float,” became the first financial engine of Mr. Buffett’s deal machine. He used that money, along with profits from the company’s other businesses, to buy what is now a collection of 189 companies. Among the biggest are the BNSF railroad, acquired in 2010 for about $26 billion; and the electricity producer Berkshire Hathaway Energy, purchased in 2000 for $2 billion that was then expanded via its own acquisitions.
As of March 31, that cash pile, which Mr. Buffett has called his “elephant gun,” was nearly $348 billion.
Those who have sat across from Mr. Buffett at negotiating tables over the years have said that he is friendly and courteous — but unyielding when it comes to the numbers. When he is involved, rounds of haggling over price are not in the cards; he is ready to walk away.
“Warren is the most disciplined investor and the clearest thinker I’ve ever known,” said Byron Trott of the merchant bank BDT & MSD, who as a Goldman Sachs deal maker became one of the few bankers Mr. Buffett said he trusted. “His ability to distill complexity into clarity, and to lead with humility and conviction, is unmatched.”
Mr. Buffett also used Berkshire’s cash to buy an array of stocks, with a portfolio that includes American Express, Bank of America, Coke, Chevron and — in one of his most profitable investments — Apple. For those companies, Berkshire’s ownership has tended to be the equivalent of a Good Housekeeping Seal of approval.
And with Berkshire’s huge balance sheet and Mr. Buffett’s unparalleled control, the conglomerate has been able to swoop in at opportune times, buying when others must sell.
Mr. Buffett has been “an extraordinary investor in American Express and a personal friend to me,” Stephen Squeri, the chief executive of American Express, said after the Berkshire announcement.
Another key to his success was holding onto investments for ages — “our favorite holding period is forever,” he has said — letting returns compound again and again, a process that he has compared to a snowball rolling downhill. (A biography that Mr. Buffett cooperated with, but later critiqued, is named after the phenomenon.)
Berkshire’s other advantage for its investors is that it charges no fees, unlike mutual funds or hedge funds. In fact, Mr. Buffett has criticized the size of the fees charged by Wall Street vehicles.
That said, Mr. Buffett has admitted that he made plenty of mistakes over the years. One was passing up opportunities to invest early in technology giants like Amazon and Microsoft, whose businesses he said he didn’t understand at the time.
Still, despite several periods of underperformance, especially in recent years, Mr. Buffett’s track record is astounding. According to his calculations, Berkshire gained 5,502,284 percent from 1964 through 2024, compared with the S&P 500’s 39,054 percent over the same period. His average annual gain was 19.9 percent, while the S&P’s was 10.4 percent.
Mr. Buffett’s approach has inspired countless other financiers, including Mr. Ackman and the mutual fund mogul Mario Gabelli. (Others have sought to copy it more directly, including Sardar Biglari, whose own financial vehicle, Biglari Holdings, shares Berkshire’s initials, website design and investing focus.)
Yet Mr. Buffett transcended business renown and attained actual celebrity, drawing on a folksy Nebraska persona that eschewed the usual trappings of plutocratic wealth. Fans make pilgrimages to his longtime house in Omaha and favorably cite his preferences for mainstream products like Cherry Coke, Dairy Queen Blizzards and See’s fudge. (All, notably, are associated with Berkshire.)
He also became known in pop culture, via cameo appearances on television shows including “All My Children” and “The Office.”
He poked fun at what he saw as the failing of the business world and Wall Street, in particular, regularly deriding professional brokers and traders for turning the markets into a “gambling parlor” that could lure average investors into financial ruin.
He took a more serious stand against Wall Street’s excesses in 1991 when as a major shareholder of Salomon Brothers, he was forced to bail out the investment bank after a trading scandal. It was a low moment in Mr. Buffett’s career.
Called to testify before Congress about Salomon, Mr. Buffett delivered a steely message to the firm’s employees: “Lose money for the firm, and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.”
His fame also gave him unique sway in Washington, adding weight to his pronouncements on political and fiscal issues. Mr. Ackman said that policymakers also closely followed Mr. Buffett’s comments and annual letters, and acted on his ideas like treating stock options for executives as a corporate expense.
Though a Democrat who endorsed Hillary Clinton for president and whose name graced an Obama-era proposal for higher taxes on the wealthy, Mr. Buffett advised presidents from both parties. That was most visible in 2008, when he was beseeched by corporate executives and the George W. Bush administration to help the global financial system from melting down.
Mr. Buffett eventually agreed to invest billions in Goldman Sachs and General Electric, moves that Mr. Ackman compared with J.P. Morgan’s efforts to save banks early in the 20th century. True to form, however, he charged both companies a then-astronomical interest rate of 10 percent — a burden executives have said they were willing to pay to gain his imprimatur and survive.
“Warren Buffett represents everything that is good about American capitalism and America itself,” Jamie Dimon, the chief executive of JPMorgan Chase, said after Saturday’s announcement.
While the future of Berkshire appears financially solid, with Mr. Ackman calling the company “the Rock of Gibraltar,” longtime Buffett followers say that it may not retain its seemingly mythical status without its chief architect.
Berkshire’s next chief executive, Gregory Abel, is regarded as an excellent operator of businesses and a savvy deal maker, and Mr. Buffett hired Todd Combs and Ted Weschler as high-level investment executives more than a decade ago.
To Lawrence Cunningham, director of the Weinberg Center for Corporate Governance at the University of Delaware and a shareholder, Mr. Buffett has “given Berkshire the best possible chance for the next chapter.”
But other investors worry that the company will become a bit less special, and won’t revolve around the stock picking that put it on the map. Bill Smead, whose investment firm owns Berkshire stock and who attended this year’s annual meeting, said the conglomerate has already become less ambitious, eschewing potentially transformative deals.
“It’s the end of an era,” Mr. Smead said.
Businessman Brian Kahn has pleaded guilty to conspiracy to commit securities fraud in a case that brought down a hedge fund, helped lead to the bankruptcy of a retailer and damaged West Los Angeles investment bank B. Riley Financial.
Kahn, 52, admitted in a Trenton, N.J., federal court Wednesday to hiding trading losses that brought down Prophecy Asset Management in 2020. The Securities and Exchange Commission alleged the losses exceeded $400 million.
An investor lawsuit has accused Kahn of funneling some of the fund’s money to Franchise Group, a Delaware retail holding company assembled by the investor that owned Vitamin Shoppe, Pet Supplies Plus and other chains.
B. Riley provided $600 million through debt it raised to finance a $2.8-billion management buyout led by Kahn in 2023. It also took a 31% stake in the company and lent Kahn’s investment fund $201 million, largely secured with shares of Franchise Group.
Kahn had done deals with B. Riley co-founder Bryant Riley before partnering with the L.A. businessman on Franchise Group.
However, the buyout didn’t work out amid fallout from the hedge fund scandal and slowing sales at the retailers. Franchise Group filed for bankruptcy in November 2024. A slimmed-down version of the company emerged from Chapter 11 in June.
B. Riley has disclosed in regulatory filings that the firm and Riley have received SEC subpoenas regarding its dealings with Kahn, Franchise group and other matters.
Riley, 58, the firm’s chairman and co-chief executive, has denied knowledge of wrongdoing, and an outside law firm reached the same conclusion.
The failed deal led to huge losses at the financial services firm that pummeled B. Riley’s stock, which had approached $90 in 2021. Shares were trading Friday at $3.98.
The company has marked down its Franchise Group investment, and has spent the last year or so paring debt through refinancing, selling off parts of its business and other steps, including closing offices.
The company announced last month it is changing its name to BRC Group Holdings in January. It did not immediately respond to requests for comment.
At Wednesday’s plea hearing, Assistant U.S. Atty. Kelly Lyons said that Kahn conspired to “defraud dozens of investors who had invested approximately $360 million” through “lies, deception, misleading statements and material omissions.”
U.S. District Judge Michael Shipp released Kahn on a $100,000 bond and set an April 2 sentencing date. He faces up to five years in prison. Kahn, his lawyer and Lyons declined to comment after the hearing.
Kahn is the third Prophecy official charged over the hedge fund’s collapse. Two other executives, John Hughes and Jeffrey Spotts, have also been charged.
Hughes pleaded guilty and is cooperating with prosecutors. Spotts pleaded not guilty and faces trial next year. The two men and Kahn also have been sued by the SEC over the Prophecy collapse.
Bloomberg News contributed to this report.
Chatty bots are sharing their hot takes through hundreds of thousands of AI-generated podcasts. And the invasion has just begun.
Though their banter can be a bit banal, the AI podcasters’ confidence and research are now arguably better than most people’s.
“We’ve just begun to cross the threshold of voice AI being pretty much indistinguishable from human,” said Alan Cowen, chief executive of Hume AI, a startup specializing in voice technology. “We’re seeing creators use it in all kinds of ways.”
AI can make podcasts sound better and cost less, industry insiders say, but the growing swarm of new competitors entering an already crowded market is disrupting the industry.
Some podcasters are pushing back, requesting restrictions. Others are already cloning their voices and handing over their podcasts to AI bots.
Popular podcast host Steven Bartlett has used an AI clone to launch a new kind of content aimed at the 13 million followers of his podcast “Diary of a CEO.” On YouTube, his clone narrates “100 CEOs With Steven Bartlett,” which adds AI-generated animation to Bartlett’s cloned voice to tell the life stories of entrepreneurs such as Steve Jobs and Richard Branson.
Erica Mandy, the Redondo Beach-based host of the daily news podcast called “The Newsworthy,” let an AI voice fill in for her earlier this year after she lost her voice from laryngitis and her backup host bailed out.
She fed her script into a text-to-speech model and selected a female AI voice from ElevenLabs to speak for her.
“I still recorded the show with my very hoarse voice, but then put the AI voice over that, telling the audience from the very beginning, I’m sick,” Mandy said.
Mandy had previously used ElevenLabs for its voice isolation feature, which uses AI to remove ambient noise from interviews.
Her chatbot host elicited mixed responses from listeners. Some asked if she was OK. One fan said she should never do it again. Most weren’t sure what to think.
“A lot of people were like, ‘That was weird,’” Mandy said.
In podcasting, many listeners feel strong bonds to hosts they listen to regularly. The slow encroachment of AI voices for one-off episodes, canned ad reads, sentence replacement in postproduction or translation into multiple languages has sparked anger as well as curiosity from both creators and consumers of the content.
Augmenting or replacing host reads with AI is perceived by many as a breach of trust and as trivializing the human connection listeners have with hosts, said Megan Lazovick, vice president of Edison Research, a podcast research company.
Jason Saldanha of PRX, a podcast network that represents human creators such as Ezra Klein, said the tsunami of AI podcasts won’t attract premium ad rates.
“Adding more podcasts in a tyranny of choice environment is not great,” he said. “I’m not interested in devaluing premium.”
Still, platforms such as YouTube and Spotify have introduced features for creators to clone their voice and translate their content into multiple languages to increase reach and revenue. A new generation of voice cloning companies, many with operations in California, offers better emotion, tone, pacing and overall voice quality.
Hume AI, which is based in New York but has a big research team in California, raised $50 million last year and has tens of thousands of creators using its software to generate audiobooks, podcasts, films, voice-overs for videos and dialogue generation in video games.
“We focus our platform on being able to edit content so that you can take in postproduction an existing podcast and regenerate a sentence in the same voice, with the same prosody or emotional intonation using instant cloning,” said company CEO Cowen.
Some are using the tech to carpet-bomb the market with content.
Los Angeles podcasting studio Inception Point AI has produced its 200,000 podcast episodes, accounting for 1% of all podcasts published on the internet, according to CEO Jeanine Wright.
The podcasts are so cheap to make that they can focus on tiny topics, like local weather, small sports teams, gardening and other niche subjects.
Instead of a studio searching for a specific “hit” podcast idea, it takes just $1 to produce an episode so that they can be profitable with just 25 people listening.
“That means most of the stuff that we make, we have really an unlimited amount of experimentation and creative freedom for what we want to do,” Wright said.
One of its popular synthetic hosts is Vivian Steele, an AI celebrity gossip columnist with a sassy voice and a sharp tongue. “I am indeed AI-powered — which means I’ve got receipts older than your grandmother’s jewelry box, and a memory sharper than a stiletto heel on marble. No forgetting, no forgiving, and definitely no filter,” the AI discloses itself at the start of the podcast.
“We’ve kind of molded her more towards what the audience wants,” said Katie Brown, chief content officer at Inception Point, who helps design the personalities of the AI podcasters.
Inception Point has built a roster of more than 100 AI personalities whose characteristics, voices and likenesses are crafted for podcast audiences. Its AI hosts include Clare Delish, a cooking guidance expert, and garden enthusiast Nigel Thistledown.
The technology also makes it easy to get podcasts up quickly. Inception has found some success with flash biographies posted promptly in connection to people in the news. It uses AI software to spot a trending personality and create two episodes, complete with promo art and a trailer.
When Charlie Kirk was shot, its AI immediately created two shows called “Charlie Kirk Death” and “Charlie Kirk Manhunt” as a part of the biography series.
“We were able to create all of that content, each with different angles, pulling from different news sources, and we were able to get that content up within an hour,” Wright said.
Speed is key when it comes to breaking news, so its AI podcasts reached the top of some charts.
“Our content was coming up, really dominating the list of what people were searching for,” she said.
Across Apple and Spotify, Inception Point podcasts have now garnered 400,000 subscribers.
Los Angeles County is suing four oil and gas companies for allegedly failing to plug idle oil wells in the large Inglewood Oil Field near Baldwin Hills.
The lawsuit filed Wednesday in Los Angeles Superior Court charges Sentinel Peak Resources California, Freeport-McMoran Oil & Gas, Plains Resources and Chevron U.S.A. with failing to properly clean up at least 227 idle and exhausted wells in the oil field. The wells “continue to leak toxic pollutants into the air, land, and water and present unacceptable dangers to human health, safety, and the environment,” the complaint says.
The lawsuit aims to force the operators to address dangers posed by the unplugged wells. More than a million people live within five miles of the Inglewood oil field.
“We are making it clear to these oil companies that Los Angeles County is done waiting and that we remain unwavering in our commitment to protect residents from the harmful impacts of oil drilling,” said Supervisor Holly Mitchell, whose district includes the oil field, in a statement. “Plugging idle oil and gas wells — so they no longer emit toxins into communities that have been on the front lines of environmental injustice for generations — is not only the right thing to do, it’s the law.”
Sentinel is the oil field’s current operator, while Freeport-McMoran Oil & Gas, Plains Resources and Chevron U.S.A. were past operators. Energy companies often temporarily stop pumping from a well and leave it idle waiting for market conditions to improve.
In a statement, a representative for Sentinel Peak said the company is aware of the lawsuit and that the “claims are entirely without merit.”
“This suit appears to be an attempt to generate sensationalized publicity rather than adjudicate a legitimate legal matter,” general counsel Erin Gleaton said in an email. “We have full confidence in our position, supported by the facts and our record of regulatory compliance.”
Chevron said it does not comment on pending legal matters. The others did not immediately respond to a request for comment.
State regulations define “idle wells” as wells that have not produced oil or natural gas for 24 consecutive months, and “exhausted wells” as those that yield an average daily production of two barrels of oil or less. California is home to thousands of such wells, according to the California Department of Conservation.
Idle and exhausted wells can continue to emit hazardous air pollutants such as benzene, as well as a methane, a planet-warming greenhouse gas. Unplugged wells can also leak oil, benzene, chloride, heavy metals and arsenic into groundwater.
Plugging idle and exhausted wells includes removing surface valves and piping, pumping large amounts of cement down the hole and reclaiming the surrounding ground. The process can be expensive, averaging an estimated $923,200 per well in Los Angeles County, according to the California Geologic Energy Management Division, which notes that the costs could fall to taxpayers if the defendants do not take action. This 2023 estimate from CalGEM is about three times higher than other parts of the state due to the complexity of sealing wells and remediating the surface in densely populated urban areas.
The suit seeks a court order requiring the wells to be properly plugged, as well as abatement for the harms caused by their pollution. It seeks civil penalties of up to $2,500 per day for each well that is in violation of the law.
Residents living near oil fields have long reported adverse health impacts such as respiratory, reproductive and cardiovascular issues. In Los Angeles, many of these risks disproportionately affect low-income communities and communities of color.
“The goal of this lawsuit is to force these oil companies to clean up their mess and stop business practices that disproportionately impact people of color living near these oil wells,” County Counsel Dawyn Harrison said in a statement. “My office is determined to achieve environmental justice for communities impacted by these oil wells and to prevent taxpayers from being stuck with a huge cleanup bill.”
The lawsuit is part of L.A. County’s larger effort to phase out oil drilling, including a high-profile ordinance that sought to ban new oil wells and even require existing ones to stop production within 20 years. Oil companies successfully challenged it and it was blocked in 2024.
Rita Kampalath, the county’s chief sustainability officer, said the county remains “dedicated to moving toward a fossil fuel-free L.A. County.”
“This lawsuit demonstrates the County’s commitment to realizing our sustainability goals by addressing the impacts of the fossil fuel industry on front line communities and the environment,” Kampalath said.
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