Buffett's and Berkshire Hathaway's challenge, once the company began to be substantially larger and to generate billions of dollars in profits annually, was to find ways to still invest such significant sums without losing most of his return on equity. He did it by acquiring so-called "growth companies" when they were selling at a big discount to their intrinsic value. At first, though, he balked at this. It was not what Benjamin Graham had taught him.

However, the latter, or growth at value prices, approach is more like buying shares of Coca-Cola (KO) in the early 1970s when markets had endured steep dips and one could, as BRK did, buy huge amounts of future KO profits for a small enough amount that future returns on equity were bound to be in the high double-digits. With its market share dominance, Coke was not going anywhere but up in the years ahead. People were not going to stop buying sweet, carbonated beverages. Quite the contrary, as KO expanded its operations overseas, the growth company's profits would simply balloon.

Warren Buffett with Alice Schroeder (Wikipedia)

Even so, the sky is no longer the limit for Berkshire Hathaway. Yes, it is almost certain to keep growing, in the process absorbing more and more exceptionally lucrative companies, but BRK's average rate of growth cannot keep pace with its own stellar record of almost 20% a year. If it did, it would need eventually to swallow up the whole solar system, comets, planets, asteroids, the entire sun, the billions of icy planetoids in the oort cloud, all of it, then move on until, like a vast black hole, it would next consume the whole of the Milky Way galaxy. Instead, Berkshire Hathaway will likely keep doing well, probably very well, besting the average returns of the S&P 500 Index, but at a slowing pace of superior advance.

A summary of successful principles suggested by these investment geniuses follows:

1. Only invest when strong balance sheets plus net value make one's purchases worth a lot more than one is paying for them.

2. Keep a margin of safety, the difference between the (lower) cost of an equity and its (higher) intrinsic value. When a stock loses its margin of safety, so that its price is now greater than its true value, it is time to sell.

3. Most of the time, hold a substantial portion of one's liquid funds back in relatively low-risk securities, such as short-term bonds, so one will be able to invest at better bargain levels when stocks periodically fall into disfavor.

4. Rebalance holdings regularly, for example once a year, so that if stocks have advanced but bonds have languished (or vice versa) one can sell some of the former at a profit and buy more of the latter at a discount.

5. The stock market, "Mister Market," is highly irrational, sometimes quoting stocks at way more than their intrinsic values and at other times for far below what their shares are truly worth. The wise investor will take advantage of these swings, buying low and selling high. By contrast, the typical investor is swayed by these surges and retreats, greedily buying more when prices are up, fearfully selling out when they are going down. Thus on average he or she frequently buys high and sells low.

1. Focus investments in a handful of exceptionally good companies.

2. Find these enterprisers via what the best of their competition's managers say about them or, in general, via a superior network feeding one intelligence about the businesses that will do well through thick and thin.

3. Select only the best of companies for investment using assessments of their qualities of leadership in human resources, financial accounting, adaptability, high business standards control, accessibility to potential shareholders, honesty, and farsightedness.

4. Select them as well based on such business criteria as command of a market niche, good return on capital, superior research and development, excellent profit margins, above average sales efforts, and a continued growth outlook.

5. Hold shares in such outstanding companies for the very long-term.

1. Always be carefully investing in something. To do this, spend less than you earn. Put the difference into your nest egg, preferably in tax-deferred accounts. Over time, one's net asset value will do very well.

2. Getting into debt is not a good idea. If you do have debt, pay it off or at least keep payments current until you can.

3. Think of investing in stocks the way you would consider taking partial ownership in a well run business. Do not be too quick to get in. But once you are sure it is a good company and have taken the plunge, also do not be too quick to get out.

4. Keep overhead low, really, really low, and profits high, really, really high, and prize managements (like at Berkshire Hathaway) that do the same and that pass their profits along to their shareholders.

5. Once one has accrued a pile of cash (or cash equivalents) do not be too eager to get rid of it. A pile of cash is hard to come by. Make certain the movie about where you put it is going to have a happy ending.

1. While investing is better than not investing and good investing is better than bad investing, above all else, as Buffett says: "Rule number one is never to lose money. Rule number two is never to forget rule number one."

2. Companies in which to invest should be understandable, demonstrate profits via positive cash flow, not require an intellectual giant to run them, and have predictable earnings, a controlling market share or business franchise, good return on capital, and little debt. They ought to also have owner-oriented policies, assuring sustained proceeds for their shareholders.

3. Only occasionally is a great business for sale in the stock market at a fantastic price. Be prepared when that does occur to load up the truck! Then hold onto those shares as long as the enterprise remains superior.

4. Market gyrations should be viewed as your friend. Use them to buy the best at going-out-of-business sale prices, never an excuse to sell wonderful enterprises just because their shares are going down in price.

5. Once one has been especially successful, be ready as well to be singularly generous.

• Benjamin Graham's The Intelligent Investor

• Carol Loomis's Tap Dancing to Work: Warren Buffett on Practically Everything, 1966 - 2013

• Janet Lowe's Damn Right: Behind the Scenes with Berskshire Hathaway Billionaire Charlie Munger

• John Train's The Money Masters

• Philip A. Fisher's Common Stocks And Uncommon Profits