Warren Buffett has a knack for beating the market. So his annual letter to shareholders, which he released this weekend, is required reading for savvy investors.

The letter starts with a revealing table showing that since 1965, Berkshire Hathaway Inc.'s corporate portfolio has outperformed the S&P 500 Index in all but eight years. Buffett's holding company has seen its book value grow at a compounded annual rate of 20.2 percent from 1965 to 2010, according to the company's annual letter to shareholders. During the same 46-year span, the S&P scored a compounded annual gain of 9.4 percent.

Overall, a Berkshire share would have appreciated an astounding 490,409 percent during Buffett's tenure. The S&P's return during the same period: 6,262 percent.

Berkshire's portfolio value has declined only twice annually since 1965 - in 2001, as a result of the tech bubble bursting, and following the stock market crash in 2008. During the same period, the S&P index suffered 11 annual declines.

All of this to say: It's no wonder why America is fascinated with Warren Buffett.