The best investor of them all: Warren Buffet

Legendary investor Warren Buffet is coming through one of the most perfect financial storms ever by putting his own tenets into practice.

He has said in the past: “Be greedy when others are fearful and fearful when others are greedy”.

There was hardly a more fearful time than last September when banks, such as Lehman Brothers, were collapsing, yet Mr Buffet invested £3 billion into Goldman Sachs on favourable terms.

As in most cases for Mr Buffet, it looks like being a good deal, with potential profits in the billions.

Over the years since 1965 his company Berkshire Hathaway has achieved an incredible 20.3 per cent annual growth in value, which has resulted in a raise in value of 336,000 per cent – 84 times better than the standard US index fund, the S&P 500.

Mr Buffet has made his money – not from inventing anything, or coming up with a great business idea, but from sound investments into solid companies with little risk. (I doubt he would have fared too well on Dragons’ Den!). As well as shares in companies, Mr Buffet buys the companies themselves. Today Berkshire Hathaway owns around 70 businesses. Crucially, he has always bought shares for the long-term and, as a shareholder, thought of himself as buying a part of a business.

Mr Buffett looks for investment in profitable businesses with good prospects rather than undervalued shares. He says that focusing on share prices makes you a speculator. A real investor, he says: "looks to the asset itself to produce the return".

With such success to back him up, his are investment lessons that we should all follow.

The World's Greatest Money Maker: Evan Davis meets Warren Buffett, broadcast 2100 Monday 26 October and 1120PM Tuesday 27 October on BBC Two.