Warren Buffett stepped down as Berkshire Hathaway's chairman, capping six decades in which the company's shares compounded at 19.7% a year. His record leaves three lessons for investors: own businesses, not tickers; hold for decades; and a low-cost index fund beats stock-picking for most people.
Buy businesses, not stocks
From the start of 1965 to the end of 2025, Berkshire Hathaway's share price climbed at a compound annual rate of 19.7%, a cumulative gain the source puts at 6,099,294%. A hypothetical $10,000 investment made at the start of that period would have been worth almost $610 million as of Dec. 31 of last year. Buffett built that record by treating every purchase as a stake in a real company selling real products to real customers, not as a line on a screen.
That framework still applies now that he is no longer chairman of the conglomerate he built. Buffett's advice pushes investors to understand a company's fundamentals, its markets, and its competitive position, rather than watch a brokerage app.
Focus on the long term
Buffett produced that wealth by thinking in decades rather than quarters. Berkshire's biggest payoff illustrates the point: the firm bought Apple shares in the first quarter of 2016, and the stock is up 1,180% since the start of that year, as of Sept. 24.
Selling would have cut that gain short. Had Berkshire exited in late 2018, when Apple shares were more than 30% off their peak, it would have missed the run that followed.
Buy a low-cost index fund
Buffett has also suggested that most people are better off buying and holding a low-cost S&P 500 index fund, such as the Vanguard S&P 500 ETF, rather than picking stocks themselves. The benchmark's trailing 10-year total return stands at 319%. The fund also carries an expense ratio of just 0.03%.
For investors without the time or skills to manage individual holdings, that passive route requires no effort and can still produce strong long-term results.
Source: The Motley Fool
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