One of the basic tenets of investing is that to earn better-than-average returns, an investment typically requires higher-than-average risk. But sometimes you come across an investment that could beat a broad-based index like the S&P 500 without a high level of risk.

In his most recent letter to shareholders, Warren Buffett suggests Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) is one of those investments. Buffett might be a bit biased -- practically all of his $135 billion net worth is invested in the company, where he is the chief executive officer. But his reasoning is sound, and the stock looks attractive.

Here's why Buffett thinks his company's stock can outperform with less risk.

Continue reading

Source Fool.com