Value Investing, Explained: The “Berkshire Way”

For the first time in decades, the annual shareholder letter from Berkshire Hathaway has a new author.

Greg Abel, Warren Buffett's chosen successor and the company's new CEO, has taken over the pen from one of the most followed voices in investing history. Buffett remains chairman and a major shareholder, but an era has quietly shifted.

For anyone who has followed Buffett's letters over the years, this is huge. Written in plain English and grounded in decades of real investing experience, they became something many investors, from beginners to professionals, returned to year after year.

So what does this handover mean, and more importantly, what can the philosophy behind it teach us about our own portfolios? Let's get into it.

What Value Investing Actually Is

Value investing sounds technical, but the core idea is pretty straightforward. It means looking for businesses that are worth more than their current price tag, buying them, and then holding on.

Think of it like buying a good winter coat in July. The coat hasn't changed. It will keep you just as warm come November, but because nobody's thinking about winter coats in summer, the price is lower.

Value investors are essentially doing the same thing with businesses: looking for quality that the market is temporarily underpricing, and having the patience to wait for the gap to close.

What value investors are not doing is chasing whatever is popular right now, trying to time the market, or buying something just because the price has been going up.

How Berkshire Hathaway Embodies This Approach

Berkshire Hathaway is probably the most famous example of value investing in practice. Under Buffett, the company has spent decades buying businesses it considers fundamentally strong, often ones with durable competitive advantages, reliable earnings, and good management, and holding them for the long term.

Some of its largest holdings, like Coca-Cola and American Express, have been in the portfolio for decades. Buffett has famously said his favourite holding period is "forever," which might sound flippant but reflects a hard truth: the compounding effect of owning a great business over a long time is hard to beat.

Berkshire has also built a reputation for sitting on large amounts of cash when good opportunities aren't available, rather than investing just for the sake of it. That kind of patience is rarer than it sounds.

What Greg Abel's Leadership Means For The Philosophy

Abel has been at Berkshire for years and was Buffett's hand-picked successor,  and over the last year he’s given little indication that he intends to reinvent the investment philosophy Berkshire is built on. The core of it, buying good businesses at fair prices and holding them, is deeply embedded in how the company operates.

What this transition reminds us is that great investment principles outlast any single individual, and the framework matters more than the person applying it.

What This Means For Your Own Investing

You don't need to run a conglomerate to take something useful from the value investing mindset. A few principles translate directly to a long-term retail portfolio.

Focus On Quality Over Excitement. The most talked-about investment at any given moment is rarely the best long-term bet. Boring, well-run businesses that consistently generate earnings tend to reward patient investors more than whatever is currently generating headlines.

Think In Years, Not Weeks. Value investing only works with time. Short-term price swings are noise. What matters is whether the underlying business is growing in value over years and decades.

Use Index Funds To Put The Principles To Work. You don't need to pick individual stocks to invest like a value investor. A low-cost global index fund gives you broad exposure to quality businesses across the world, at a fair price, with no need to time the market. Buffett himself has repeatedly recommended index funds for most retail investors.

Value investing has outlasted market crashes, recessions, and plenty of people who said it was finished. Because buying good businesses at fair prices and holding them is not a strategy tied to one person or one era: it's just good investing.