For nearly six decades, Warren Buffett has done more than report numbers to shareholders. Through his annual letters to Berkshire Hathaway investors, the legendary billionaire has explained business, markets and human behaviour in plain language — often with humour, honesty and striking metaphors.
As Buffett prepares to retire at the end of 2025, his letters stand as a masterclass in capital allocation and long-term investing. From Berkshire’s humble origins as a failing textile company with just $25 million in equity to a global conglomerate valued at over $1 trillion, Buffett chronicled every step with rare candour.
Here are some of the most memorable ideas and phrases from the departing “Sage of Omaha”.
Buffett has repeatedly called his purchase of Berkshire Hathaway a mistake. Though the shares looked cheap, the underlying textile business, he admitted, was “headed for extinction”.
That realisation pushed Buffett towards what became Berkshire’s defining strength — capital allocation. Over time, he understood that Berkshire faced no institutional limits on deploying capital. The only constraint was the team’s ability to judge the long-term future of a business.
In his 1982 letter, Buffett wrote that “what really makes us dance” was buying 100 percent of good businesses at reasonable prices — while acknowledging that this was an “extraordinarily difficult job”.
One costly lesson Buffett learned was never to use Berkshire shares for acquisitions.
His decision to issue 2,72,000 Berkshire shares to buy reinsurance firm General Re in 1998 later proved disastrous. Buffett admitted: “My error caused Berkshire shareholders to give far more than they received.” It was a mistake that permanently shaped his deal-making discipline.
In his 1995 letter, Buffett explained Berkshire’s dual strategy — buying stakes in wonderful listed companies while also acquiring entire businesses when possible.
This flexible approach, he said, gave Berkshire a key edge over investors locked into a single style. To make his point, Buffett borrowed a line from Woody Allen: “The real advantage of being bisexual is that it doubles your chances for a date on Saturday night.”
One of Buffett’s most famous lines came in 1986: “Be fearful when others are greedy, and greedy only when others are fearful.”
Markets, he said, are always prone to cycles of excess optimism and panic. Spotting those moments is hard, but the behaviour itself is permanent.
Buffett has long warned that acquisitions often destroy shareholder value. In a 1994 letter, he blamed a mix of ego, overconfidence and what he called a “biological bias” among CEOs.
When encouraged by advisers to make deals, Buffett wrote, many executives need little persuasion — a blunt reminder of how emotions often override discipline in corporate decision-making.
Berkshire’s insurance businesses, especially Geico, played a crucial role in its expansion by providing low-cost investment float.
But insurance also brings risk. After Hurricane Andrew caused $125 million in losses in 1992, Buffett famously observed: “It’s only when the tide goes out that you learn who’s been swimming naked.”
The disaster exposed how poorly prepared many insurers were for extreme events.
In 2002, Buffett issued a stark warning on derivatives, calling them: “Financial weapons of mass destruction.”
He cautioned that the web of interdependence between financial institutions could become lethal in times of stress — a prediction that proved prescient during the 2008 global financial crisis.
Even so, Buffett acknowledged that Berkshire itself used derivatives — but only when they were “mispriced at inception”.
Buffett’s long-term goal has always been to outperform the S&P 500 — which means holding cash until real opportunities emerge.
In his 2016 letter, he wrote that economic storms occasionally “rain gold”, adding: “When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons.”
Berkshire operates with centralised financial control and extreme decentralisation in operations. Buffett places enormous trust in the managers running individual businesses.
One of his favourites was Rose Blumkin, who built a furniture empire after fleeing Russia and sold most of it to Berkshire in her late 80s. Buffett often joked about her energy and longevity, once writing: “After retiring, she died the next year — a sequence I point out to any other Berkshire manager who even thinks of retiring.”
Buffett regularly reassured shareholders that Berkshire’s succession was well planned. As early as 2005, he confirmed that multiple capable candidates had been identified.
In his 2007 letter, he wrote with characteristic humour: “I’ve reluctantly discarded the notion of my continuing to manage the portfolio after my death.”
As Buffett steps away, his letters remain a timeless guide — not just to investing, but to thinking clearly in a noisy financial world.
