Warren Buffett 2005 Essay Example

Hathaway’s portfolio. All four are from different sectors of the market. Buffett has done a great job diversifying Berkshire Hathaway’s portfolio and maintaining growth. Buffett defines intrinsic value as both the quantitative and qualitative aspects that make up a company’s true value. Intrinsic value is important because one must be able to assess the value of a company’s qualitative value.

Everyone has different perspectives on how to value qualitative assets of a company which makes investing in companies that difficult. Buffett has rejected the conventional definition of risk. The academic world has tried hard to accurately calculate risk when it actuality the ultimate risk is when the calculation of risk is wrong.

Conclusion

Buffett has made several valid points in his investment philosophy, but there is one point in which I disagreed; Buffett said that there was no fundamental difference between buying a business outright, and buying a few shares of that business.

He’s correct in that sense that you are buying into a form of ownership either way, but a shareholder who holds less than 1% of a company’s stocks doesn’t have the same voting power or influence as the chairman of the board who could potentially have almost half the shares. With a great track record for picking stocks and a great ability for measuring intrinsic value, Berkshire Hathaway shareholders should endorse the purchase of PacifiCorp.