Earlier this month, legendary investor Warren Buffett shocked the investing world by announcing his retirement plans. This prompted many observers to reflect on his six-decade career at the helm of Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B).
On almost every metric, Buffett's track record is impressive.
Under his leadership, Berkshire shares have increased more than 5,500% since 1965, a compound annual growth of nearly 20%.
In his last year as Berkshire's CEO, at the age of 94, Buffett has proven that he's still got it.
At the time of writing, Berkshire is up 14% for the year to date, outpacing the S&P 500 Index (SP: .INX), which has declined 4%.
There's no denying that Buffett's track record is nothing short of outstanding. So, how did he do it?
A clear preference for equities
Over his career, Buffett has demonstrated a clear preference for equities.
While he has previously invested in bonds, his equity investments have been the major contributor to Berkshire's success.
The Motley Fool's Sebastian Bowen recently wrote about Buffett's most successful equity investments. These included Apple Inc (NASDAQ: AAPL), Coca-Cola Co (NYSE: KO), and American Express Inc (NYSE: AXP).
During Berkshire's 2025 annual shareholder meeting, Buffett was asked about this preference for equities over real estate. Specifically, why he isn't buying property right now amid macroeconomic uncertainty.
He responded by saying:
Well, in respect to real estate, it's so much harder than stocks in terms of negotiation of deals, time spent, and the involvement of multiple parties in the ownership…Usually when real estate gets in trouble, you find out you're dealing with more than just the equity holder.
Buffett also acknowledged that there were times when real estate could have been acquired at bargain prices. He also noted that his late partner and Berkshire's former Vice Chairman, Charlie Munger, participated in more real estate deals. Buffett said Munger was "playing a game that was interesting to him". In fact, it has been reported that Munger made his first million dollars investing in real estate.
Foolish Takeaway
Warren Buffett became the world's most successful investor by investing in equities. Buffett found equities less complex and sought to avoid dealing with multiple parties as is required when doing real estate deals. However, Buffett's former right-hand man, Charlie Munger, who enjoyed navigating real estate investments, was more inclined to buy real estate.
The biggest takeaway from Buffett's comments and actions is to stick with what you understand and enjoy. According to the 2024 Vanguard Index Chart, Australian shares have increased by an average of 9.1% over the past 30 years. Australian real estate is not far behind, increasing at an average of 7.8% over the same time frame. Both asset classes have substantially outperformed investing in cash, which has averaged a 4.2% return since 1994.
