Buffett may be among the world's richest men, but you wouldn't know it by meeting him. He wants to be liked far more than he wants to be famous, and his sense of humor is far more indicative of his personality than his ego. Dinner isn't at chichi restaurants, but at Gorat's -- a steakhouse in Omaha. And it's always the same. The culinarily inadventerous Buffett orders a rare T-bone with a double order of hash browns and a Cherry Coke.

Buffett lives in the relatively modest five-bedroom house where he and his first wife, Susie, raised their three children. It has an assessed value of less than a million dollars. He drives himself to work each day in a gold Cadillac. Berkshire's headquarters even has fewer than two dozen employees. He's known for being humble, courteous and personable: It's not uncommon for him to take a visitor to McDonald's on the way to the airport.

Warren Buffett is no genius, but he's undeniably smart. He absorbs reams of information and has an encyclopedic recall that amazes attendees at the annual shareholder meeting, where he takes questions without notes for several hours each year. Buffett isn't a sportsman, a patron of the arts or a connoisseur of life's finer things -- with the exception of private jets, which are doubtlessly a privilege he can afford. He wears expensive suits but jokes that they look cheap on him. Buffett's only real avocation is bridge, which he often plays with his close friend Bill Gates. Buffett has even had some fun with a role on 'All My Children.'

How Buffett Became the Greatest Investor in the World

Buffett started at the University of Pennsylvania but graduated from the University of Nebraska and went to Columbia for an MBA. His mentor there was Benjamin Graham, the father of value investing, whose books Buffett already had pored over for years. He sidestepped Wall Street and went home to Omaha to join his father, who had just lost his seat in Congress and was back at his brokerage. Buffett struggled: He found far more success teaching classes about investing than in attracting clients. Eventually, he set up a number of partnerships that used the investors' capital to buy stock. Buffett made all the trades and kept the books, working from home with nothing but a telephone, a Moody's Manual and a ledger.

Buffett had been interested in the assets of a textile company called Berkshire Hathaway, which he took control of in 1965. After it became clear that Berkshire's original business was in an irreversible decline, Buffett, unwilling to commit precious capital to new looms and other equipment, started looking for other ventures.

He found one he liked -- insurance.

The insurance business offered Buffett something he dearly loved: cash. The insurance company's job is to collect premium and hold it until presented with claims that are deemed valid and due. In the meantime, it can invest that money -- called the 'float' -- anyway it wants. Buffett quickly learned to master risk and his several insurance companies have managed to turn an underwriting profit. He takes the float and buys stocks he thinks are undervalued and companies he thinks can generate tons of cash. Berkshire's investments have outperformed the S&P 500 handily over the years. The period from 1964 through 2007 showed a +400,863% gain in Berkshire's book value versus a +6,840% total return in the S&P 500.

What Buffett Buys

Buffett has never said what his exact investment criteria are, though he did suggest he had a system when he alluded to a one-page form that Graham & Associates used to make buy decisions in the early days of his career. But even without divulging his precise formula, Buffett's general investing style is no secret. In fact, Buffett -- who relished the role of teacher far more than that of billionaire -- has espoused the same investing criteria for the past several decades.

The criteria:

A business Buffett understands

He skipped the tech bubble and predicted its demise to the derision of many friends and colleagues. He likes companies that generate a lot of cash without substantial additional capital. He doesn't do high-tech because he doesn't want to pay for constant research and development needed to maintain a sustainable competitive advantage, which he insists is vital to any company's long-term success.

Favorable long-term economics

A lot of analysts have tried to decipher exactly what this means by looking at past purchases. The best hint with Buffett, however, is that he is far more concerned with the long-term balance sheet trends than he is with any individual quarterly earnings statements. He likes growth as much as the next guy, but he's far more tuned in to a superior return on equity.

Strong management

Buffett is old school. He takes meetings and sizes up the management of potential acquisitions. If they connect and Buffett trusts them, he'll do a deal on a handshake with very little additional due diligence. Thereafter, he lets the executives run their companies with their passion and best judgment -- 'delegation to the point of abdication,' to borrow Buffett's phrase. It seems to work for all involved. Berkshire has done well, and no single key manager has ever left a Berkshire company to take another job.

A sensible price tag

This is another facet of the Buffett buy formula that many have tried to decode. Buffett likes to buy on the cheap, but that's relative. Buffett thinks in terms of NAV -- he never pays for what he's getting today, he pays for what he's getting for the next 50 years. Buffett, with a few notable exceptions, invests for the very long term.

The Secret: Less Risk and Fewer Mistakes Means Better Results

Buffett is neither a financial wizard nor an innovator. He's a master of the old economy, of balance sheets, of pricing risk. If he doesn't understand it, he doesn't do it. He simply never leaves his zone of competence, and, consequently, he's very seldom been burned. A decade of modest, steady returns is preferable to 10 years of uneven results or even losses. Taking fewer risks and making fewer mistakes is far more important over the long term than being daring or even clever. Plus, when Buffett does make a bad call, he beats himself up for it in his annual shareholder's letter and then says what he learned. Then -- and this is key -- he never makes that mistake again. (All investors should consider Buffett's annual letter to shareholders required reading. They're conversational, funny, and a lot cheaper than getting an MBA.)

Buffett sticks with what works, and, even at his age has never given up on getting wiser. It's a good system.