You Can Easily Duplicate Warren Buffett's Best Investment Tactic

Reuben Gregg Brewer, The Motley Fool

Mon, Mar 10, 2025, 3:30 AM 5 min read

Warren Buffett is one of the most famous investors of all time. Indeed, the company he runs, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), is more like a mutual fund than a traditional corporation. While he doesn't talk about his investments or his investment approach very often, the man known as the Oracle of Omaha does provide some insights when he pens his company's annual shareholder letter.

In 2024, he pointed out what might be one of the biggest tactics he employs to build wealth. Here's what it is.

To fully understand why Wall Street holds Warren Buffett in such high regard really requires you to understand Berkshire Hathaway. Buffett is the CEO of that company, which is often lumped into the finance sector. But that's not a great fit because, in reality, Berkshire Hathaway is a giant conglomerate. Even that isn't enough to describe the company, though.

Most companies do one thing. Conglomerates usually do a few similar things. Berkshire Hathaway's business spans multiple industries. For example, Berkshire Hathaway has subsidiaries that sell furniture, cars, and houses. Other subsidiaries make products like paint, chemicals, manufactured houses, and specialty parts. Still other businesses operate utilities, trains, and pipelines. While most companies can summarize their business in a few paragraphs, the business description for Berkshire Hathaway runs 23 pages long in its annual 10-K.

The eclectic makeup of the company's business is directly related to the way in which Warren Buffett invests. He likes to buy good companies, either in whole or in part, when they look attractively priced. The next step, however, could be the most important one, and Buffett highlighted it specifically in the company's 2024 annual report.

There are really two investment portfolios within Berkshire Hathaway. One is filled with public stocks that the company can easily buy and sell. The other is filled with the companies Berkshire Hathaway owns directly, which are controlled businesses. In 2024, a lot of media highlighted the sales Berkshire Hathaway made within its public portfolio. But in the company's annual report, Buffett made sure to highlight that these sales were actually pretty minimal if you look at the entire portfolio of controlled and public companies within Berkshire Hathaway.

There's one line that deserves much more attention than the stock sales: "In reality, Berkshire almost never sells controlled businesses unless we face what we believe to be unending problems." The interesting thing about that statement is that it could be taken to imply that Berkshire is actively trading its public stock portfolio all the time. But that simply isn't true. Buffett has a core portfolio of public stocks that are rarely traded, including such iconic names as Coca-Cola (NYSE: KO) and American Express (NYSE: AXP).