Charlie Munger has said that the secret to Berkshire’s longterm success has been its ability to “generate funds at 3 percent and invest them at 13 percent,” and this consistent ability to create low-cost funds for investment has been an underappreciated contributor to the company’s financial success.1 Remarkably, Buffett has almost entirely eschewed debt and equity issuances—virtually all of Berkshire’s investment capital has been generated internally.
