The Oracle's Farewell

Greetings from Team Carnelian!!

Metric	Value/description
A global institution (market cap)	USD 1.6tn
Head office employees	27
CAGR (1965-2025)	19.9%
Outperformance	>140x S&P 500
Investment of USD10,000 in 1965 after 60years worth	USD 438mn
Top 5 holdings	USD 171 bn (60% of total portfolio)
Largest cash reserve reported	USD 348 bn (5% of US treasury)
Top multibaggers	1.GEICO (100x) 2. Coca-Cola (20x) 3.American Express (15x) 4. Washington Post (10x) 5.Apple (6x)
Personal net worth	USD 160 bn
Philanthropy	USD 51+ bn (as of 2024)

After reading the table above, I am sure most of us can relate that we are talking about the messiah for investors – Warren Buffet. He is the only investor in the world who has delivered 19.9% CAGR returns with 10% alpha over the last 60 years. Longevity of returns plays much bigger role in wealth compounding. Buffett emphasizes the key role that compounding has played in his financial success.

“My wealth has come from a combination of living in America, some lucky genes, and compound interest”

Born in Omaha, during the Great Depression, a young Warren Buffet dared to dream bigger than his circumstances. As he hustled with small ventures, selling gum and newspapers, he discovered that every humble effort could yield extraordinary rewards. He bought his first stocks at the age of 11. Even then, he held true to a simple truth:

“The best investment you can make is in yourself.”

Buffett’s relentless thirst for knowledge led him to Benjamin Graham’s teachings. He absorbed mantras like 

• “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.”

• “Price is what you pay; value is what you get.” 

• Buying a stock is buying a piece of a business.

• Buffet uses a simple checklist for his investee companies:

  • a sensible price tag

  • durable competitive advantages

  • able and trustworthy management and

  • business that he can understand (within his circle of competence)

These insights transformed the stock market from a chaotic gamble into a precise art, where understanding a business’s true worth outweighed its momentary price.

Investing amid crisis

Emboldened by his new philosophy, Buffet entered the world of real investments in the 1950s. The true turning point came with his bold transformation of Berkshire Hathaway. What started as a failing textile company blossomed under his guidance into a multifaceted empire. In his later years, enriched by the collaborative wisdom of partners like Charlie Munger, Buffet’s insights reached a profound clarity. He urged investors to master their emotions & act with conviction amid chaos.

Case study - American Express

In the 1960s, American Express was rocked by a major scandal that sent its stock tumbling and sowed widespread fear among investors. While many panicked, Buffett saw an opportunity. He analyzed the company’s fundamentals and recognized that its core business and brand loyalty remained intact. By buying heavily into American Express when others fled, Buffett demonstrated his belief in the principle of being “greedy when others are fearful”. He held onto his investment through turbulence, and as the company recovered, the returns were substantial. 

The power of quality

While Buffet initially focused more on buying undervalued stocks, Munger’s influence led him to shift towards a preference for high-quality businesses with economic moats, competent management, long-term profitability potential & capital allocation.

• Economic moats – “The wider the moat, the more certain the future profitability.”

• Management quality – “We want management to be candid with us and to be good stewards of the capital we entrust them with.”

• Long-term profitability – “It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

• Capital allocation- sorts businesses in 3 categories - Great, Good and Gruesome.

  • Great business hardly requires any reinvestment for growth

  • Good business will grow but consumes capital to grow

  • Gruesome business is one that grows rapidly, requires a lot of capital and earns meagre profits

Case study - Coca-Cola

At the time, Coca-Cola was recovering from the “new coke” fiasco, and its stock was under pressure. Buffett recognized the enduring strength of the brand, its global reach, and its pricing power. He invested approximately USD1 bn for a 7% stake, holding firm through market cycles and short-term noise. Today, that stake is worth over USD 20 bn. Buffett’s patience and focus on quality businesses with economic moats, those that can withstand competitive pressures are especially relevant as companies worldwide now face unpredictable trade policies and global demand shocks.

Embracing change

Warren Buffett’s ability to adapt to change is one of the core reasons for his sustained success in investing. While known for his conservative, value-investing approach, Buffett has demonstrated an impressive capacity to evolve with the times, staying relevant in the face of new economic trends, market disruptions, and emerging technologies.

Case study - Apple

He was drawn not just by Apple’s products, but by its powerful ecosystem and services business, which created recurring revenue and customer loyalty. In his 2025 AGM, he expressed gratitude to Steve Jobs for his unparalleled contributions to Apple, stating, "No one could have done what he (Steve Jobs) did at Apple, but Tim Cook has made more money for Berkshire than I ever have!"

Embracing mistakes

Buffett has always been open about his mistakes, publicly reflecting on them and encouraging others to learn from failures. His ability to move forward from mistakes with humility and resilience has made him not just a successful investor but also a role model for anyone who faces challenges in life. His philosophy of learning from failure is integral to his success and longevity in the business world.

Case Study – Dexter Shoes

“The only explanation is that my brain had gone on vacation & forgotten to notify me.”

“I gave away 1.6% of a wonderful business (Berkshire Hathaway) – one now valued at USD 220 bn – to buy a worthless business (Dexter shoes).” – Warren Buffet (2007)

He acquired Dexter Shoes for USD 433 mn & paid for it by issuing Berkshire shares. Buffett admitted that Dexter was not the quality of business he thought it was at the time of purchase. The case highlighted the importance of a company having a strong moat. Dexter had no sustainable advantage over its foreign competitors, leading to its eventual downfall.

60 years of wisdom – As he steps down from CEO of Berkshire Hathaway

I had the privilege of attending the 2025 Berkshire Hathaway annual shareholders meeting held on May 3rd in Omaha, which marked a historic moment as Warren Buffett, at the age of 94, announced his retirement as CEO by year-end, concluding a remarkable 60-year tenure.

Warren Buffet in 3 words – patience, discipline & humility

Since 1957, he has consistently written an annual letter to his partners/shareholders, sharing valuable lessons on investing and life. He aims to provide his investors with the information he would want if their roles were reversed. He refers to his shareholders as "owner partners" and to himself and Charlie as "managing partners." Remarkably, he still lives in the house he purchased in 1950, and his compensation has remained USD 100,000 for the past 25 years, with no expectation of an increase.

Life lessons

• Compound good intentions and good behaviour.

• A happy person lives longer than someone who does things they don’t really admire.

• The world isn’t going to adapt to you, but you will have to adapt to the world.

• For youngsters: Don’t worry about starting salaries but be very careful who you work for because you will adopt their habits.

• If you are going to do something and are going to lose, then quit!

• Work with people who are better than you. Work with people who make you better and help you grow as a person. Your life will progress in the general direction of the people you work with.

• Don’t feel guilty about your good luck.

• If you find people who are wonderful to work with, that’s the place to be.

• Keep a lot of curiosity and read a lot.

• Learn not only how to be successful in business but also how to be successful in life.

• Hard work takes us a long way in life! Work ethics, a great attitude, and loving what you do will make you successful.

Investing, economy and business

• The CEO who misleads others in public may eventually mislead himself in private.

• While the world may be unpredictable, sound investing principles remain timeless.

• The game is won or lost in the compound interest business. Time is the friend of the wonderful business, the enemy of the mediocre.

• The most important thing to do if you find yourself in a hole is to stop digging.

• You should invest in a business that even a fool can run, because someday a fool will.

• Do not save what is left after spending but spend what is left after saving.

• The biggest thing you have to do is ensure you can play the next day.

• You only have to get rich once – you don’t want to do anything that risks it. If foolish things are happening around you, leading to people getting richer, you do not want to participate.

• Check your emotions at the door when you invest.

• Turning every page is important in investment to get ideas.

• Spend more time on balance sheets than on income statements, and review them for a period of 10 years before even looking at the P&L.

• To invest compulsorily is the dumbest thing to do!.

For those who have studied Warren Buffett's career, it’s evident that his approach to volatility is not about panic, quick fixes, or chasing the latest trends. His principles, often simple yet profound, offer a calm and steady path through chaos. As we navigate this volatile period, his wisdom is more relevant than ever.

• Long-term perspective: Buffett’s favourite holding period is “forever.” He ignores short-term market noise and focuses on a company’s ability to grow over years and decades.

• Discipline and emotional control: Buffett is renowned for keeping his composure when others lose theirs, acting counter-cyclically, and never letting panic dictate his decisions.

• Value and margin of safety: He buys quality businesses at prices below their intrinsic value, always ensuring a margin of safety in case things go wrong.

• Business owner’s mindset: He treats every stock purchase as if he were buying part of a business, focusing on the company’s fundamentals, management quality, and long-term prospects. This owner’s mindset leads to more disciplined, long-term decision-making rather than speculation.

Buffett’s journey teaches us that uncertainty is not something to fear but something to navigate with wisdom and patience. Let us invest in ourselves, focus on quality, and remember that the greatest rewards come to those who think long-term and act with discipline.

In Buffett’s words, “Someone is sitting in the shade today because someone planted a tree long ago.” Let us plant our trees with care and trust that, in time, they will bear fruit.