The Oracle has returned 40% (and counting!) by faithfully following this little proverb:
"Be fearful when others are greedy, and be greedy when others are fearful…."
Starting with Mars in April of 2008, when credit markets began to tighten in advance of the financial crisis, some big-name companies looked to Mr. Buffett—and Berkshire's huge war chest—as a lender of last resort…
In six major deals, Berkshire invested a total of about $26 billion. Mr. Buffett used Berkshire's gigantic cash hoard to move swiftly and exact lucrative terms that created a stream of payments from the borrowers….
Several deals are continuing to pay hefty dividends. Berkshire also owns equity stakes in the firms, or warrants to buy them, that add several billion dollars more to the company's return on investments, at least on paper.
Although the warrants on some of these deals effectively came free with Berkshire's purchase of preferred shares, accounting rules require the company to split its cost between the stock and warrants acquired. That means Berkshire records gains differently in its books than a cash-in, cash-out tally adding up to about $10 billion.