Mazor'sEdge

Unlike many mutual funds and ETFs that focus on specific market segments, Warren Buffett takes a broader approach. He values flexibility over restriction, believing that investment success comes from being free to pursue any opportunity that makes sense—without being boxed into a particular strategy.

At the 2007 Berkshire Hathaway Annual Meeting, Buffett explained, “We think the most logical fund is the one we have at Berkshire where… we can do anything that makes sense and are not compelled to do anything that we don’t think makes sense.” He emphasized that funds limited to a single asset class—like only bonds or only futures—are at a disadvantage compared to those with broader discretion, provided the right person is in charge.

In essence, Buffett’s strategy is about keeping options open, maximizing flexibility, and avoiding unnecessary constraints in the pursuit of long-term value.

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© 2025 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Warren Buffett frequently references “Mr. Market,” an important concept introduced by Benjamin Graham in The Intelligent Investor, to illustrate the unpredictable nature of the stock market. Mr. Market symbolizes the market’s emotional swings, sometimes offering fair prices and other times presenting irrational valuations driven by fear or enthusiasm.

Buffett stresses that investors should view the market as a servant, not a guide. At the 2012 Berkshire Hathaway Annual Meeting, he described Mr. Market as a “psychotic drunk” prone to frequent mistakes. “Your job is to remember that he’s there to serve you and not to advise you,” Buffett explained.

The lesson is clear: investors must form their own assessment of a company’s value based on its financial health and performance. As Graham advised, only engage with Mr. Market when his offers align with your valuation—selling at inflated prices and buying during downturns. The rest of the time, wise investors ignore the noise and trust their own analysis.

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 2025 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Investing in businesses on the decline might seem like an opportunity, especially when their stock prices appear low and dividends are still flowing. However, legendary investor Warren Buffett advises against this approach.

During the 2012 Berkshire Hathaway Annual Meeting, Buffett cautioned investors to steer clear of declining businesses, regardless of how cheap they may appear. He acknowledged that early in his career, he sought out what he called “cigar butt” businesses — companies with just a little life left. However, he later realized that the same effort and intelligence applied to healthier, growing businesses would yield far better returns.

“You’d be amazed at the offerings of businesses we get where they say it’s only six times EBITDA,” Buffett remarked, dismissing optimistic projections of struggling companies. He emphasized that the real profits lie in businesses with strong growth potential, not those in decline.

For investors seeking long-term success, Buffett’s advice is clear: focus on companies with bright futures rather than chasing fleeting value in dying enterprises.

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 2025 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.