“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” If you can grasp this simple advice from Warren Buffett, you should do well as an investor. Sure, there are other investment strategies out there, but Buffett’s approach is both easy to follow and demonstrably successful over a period of more than 50 years. Why try anything else?

For anyone who is not an accountant, annual reports of companies are dull things indeed. Once you know how much money a company has made (and you don’t need the annual report for that), there isn’t anything much that’s worth reading. However, there is one company in the world whose annual report is eagerly awaited for the interesting reading material that it has and that’s the American company Berkshire Hathaway.

The reason? The annual letter to shareholders that is written by the great investor (and Berkshire Hathaway’s Chairman and CEO), Warren Buffett. Buffett is perhaps one of the most respected businessmen of the world. His ideas on business and investing are full of a simple wisdom that would have sounded naive and unworldly had it not been for Buffett’s fantastic track record. Buffett’s 2007 letter, which was released on February 29, is as interesting to read as any of the earlier ones.

The central tenet of Buffett’s investment philosophy is that one should not invest in anything that one does not understand and that one should be unremittingly focused on long-term value. Buffett is also deeply skeptical of financial engineering and ‘innovative’ financial instruments. In today’s situation, when volatility rules and people are investing day-to-day and sometimes hour-to-hour, it’s worthwhile to take a cool look at what people like Warren Buffett have achieved and how they’ve achieved it.

Last week, I read a newspaper article whose writer asked some well-known names in the investment management business their opinion of Buffett and came away with a lot of the criticism. The underlying theme in most of these views seemed to be that Buffett’s approach is somehow unrealistic and not suited to ‘flexible’ approach required by working fund managers. This theme is there in a lot of the criticism that Buffett faces. I find this line of criticism bizarre because it sort of seems to suggest that Warren Buffett is some sort of a guy who lives in a cave somewhere and keeps preaching impractical stuff that doesn’t work in the real world.

Excuse me, but Buffett sits at the top of the real world. As of now he’s the richest man in that real world. He is the only investor who is amongst the richest people in the world. He is exactly as flexible-no more, no less-than was needed to generate returns of 5,000 (500,000 per cent) times for his shareholders over 40 years, beating the stock markets by a wide margin. I think the basic reason for so many financial industry types around the world to be anti-Buffett is nothing but jealousy.

Not only has he done better than them, but he has done so while frequently expressing utter contempt for their ways. He has gone so far as to call the sub prime-induced crisis ‘poetic justice’ for Wall Street. Last years’ letter argued that complex financial instruments are time bombs and “financial weapons of mass destruction” that could harm not only their buyers and sellers, but the whole economic system. Buffett has been justifiably able to say ‘I told you so,’ for so long that it’s no surprise that a lot of people are irritated by his success.

In a crowd of investors and businessmen who seem to be competing to be more and more like each other, here’s a man who speaks in a unique voice-and more importantly, listens to it, and lives by it.

If investing in wonderful companies at fair prices is good enough for Warren Buffett — arguably the finest investor on the planet — it should good enough for the rest of us.