Size Doesn’t Matter to Warren Buffett – He Warns Managers Focus Too Much on the ‘Yardstick of Size’ and Not Enough on ‘Profitability’

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His reputation isn’t built on chasing the latest market obsessions, but on a signature investment style: identifying value stocks that offer high dividends and hold durable competitive advantages.However, as the modern market grapples with high valuations and the “growth at any cost” mentality of the artificial intelligence era, one of Buffett’s most important warnings — stated over four decades ago — has never been more relevant.If Palantir is Near a Bottom, What's the Best Play in PLTR Stock?Why Citi Analysts Think You Should Buy Microsoft Stock NowNVDA Earnings, Tariffs and Other Key Things to Watch this WeekOur exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today!In his 1981 shareholder letter, Buffett identified a fundamental flaw in how corporations measure success, warning that managers and investors alike often prioritize the wrong metrics.Buffett observed that most organizations, whether business-oriented or otherwise, tend to measure themselves and compensate their managers by the “yardstick of size.” He noted that if you ask a Fortune 500 manager where their company stands on that prestigious list, they will almost certainly give you a number based on sales volume.For the modern investor, the “yardstick of size” is a deceptive measurement. It focuses on how big a company can get or how much its revenue is growing. While high growth looks impressive on a chart, it often hides a grim reality. If a company is spending a fortune on capital expenditure just to maintain those sales, the overall fundamentals of the company may be weak. Growth that eats up all available cash is not growth, it is simply expansion without value.In contrast to the obsession with size, Buffett’s philosophy centers on companies with sustained profitability. To Buffett, a truly strong company isn’t just large; it is resilient. While at the helm of Berkshire Hathaway, he notoriously avoided overhyped stocks, instead placing capital into companies that are highly profitable. He often looked for “oversold” companies, those that the market has temporarily soured on but which possess strong fundamentals and are likely to return to their fair value.According to Buffett’s criteria, a profitable winner typically demonstrates strong fundamentals, consistent returns, dividend growth, and controlled volatility.CGU et Politique de confidentialitéPrivacy & Cookie SettingsMore InfoS&P Futures6,906.75 +3.00 (+0.04%)Dow Futures49,230.00 -6.00 (-0.01%)Nasdaq Futures25,055.00 +26.25 (+0.10%)Russell 2000 Futures2,657.20 +2.20 (+0.08%)VIX19.55 -1.46 (-6.95%)Gold5,229.20 +52.90 (+1.02%)Actions du momentAMD Advanced Micro Devices, Inc. 213.84 +17.24 (+8.77%)WDAY Workday, Inc. 130.23 +1.02 (+0.79%)ZETA Zeta Global Holdings Corp. 16.98 +2.00 (+13.35%)ETH-USD Ethereum USD 1,889.26 +64.25 (+3.52%)F Ford Motor Company 14.20 +0.56 (+4.11%)PortefeuilleConnectez-vous pour accéder à votre portefeuilleSe connecterLes plus performantsKEYS Keysight Technologies, Inc. 301.48 +56.48 (+23.05%)IBRX ImmunityBio, Inc. 11.55 +1.72 (+17.50%)UCTT Ultra Clean Holdings, Inc. 71.96 +10.55 (+17.18%)DRS Leonardo DRS, Inc. 43.82 +5.68 (+14.89%)BEAM Beam Therapeutics Inc. 32.29 +3.96 (+13.98%)Les moins performantsCECO CECO Environmental Corp. 60.00 -17.68 (-22.76%)XMTR Xometry, Inc. 44.44 -12.71 (-22.24%)WHR Whirlpool Corporation 71.67 -11.54 (-13.87%)AWI Armstrong World Industries, Inc. 174.30 -18.53 (-9.61%)PLNT Planet Fitness, Inc. 82.61 -8.14 (-8.97%)Les plus liquidesNVDA NVIDIA Corporation 192.85 +1.30 (+0.68%)INTC Intel Corporation 46.12 +2.49 (+5.71%)PLUG Plug Power Inc. 1.9100 +0.0700 (+3.80%)IBRX ImmunityBio, Inc. 11.55 +1.72 (+17.50%)AMD Advanced Micro Devices, Inc. 213.84 +17.24 (+8.77%)Principaux événements économiquesÉvénements concernant les bénéficesÉvénements concernant mes bénéficesÉvénements concernant les bénéfices