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Warren Buffett has long emphasized the relationship between risk and the amount of time you hold a stock, arguing that they are inextricably linked. According to Buffett, the shorter the time horizon for holding an asset, the greater the risk. This is particularly evident in day trading, where the potential for short-term price movements can lead to significant losses.

At the 1994 Berkshire Hathaway Annual Meeting, Buffett explained that if you plan to buy a stock like XYZ Corporation at 11:30 AM and sell it by the close of the same day, the risk of harm or injury is much higher. He noted that there’s a 50% chance that such a transaction could lead to a loss. On the other hand, if you buy a company with a long-term perspective, such as Coca-Cola, the risk decreases significantly. Buffett pointed out that when you hold an asset for an extended period, the risk of losing money is minimal, even if you bought it at a higher price years ago. However, he warned that buying Coca-Cola this morning and selling it the next day would be a risky move, as short-term fluctuations in stock prices could lead to significant uncertainty.

In essence, Buffett’s philosophy highlights the importance of having a long-term investment strategy to minimize risk and maximize potential returns.

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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 is often regarded as the ultimate investor, but he doesn’t believe there’s only one way to achieve financial success. His perspective on investing emphasizes that different strategies can work, depending on the investor’s approach and skillset.

At the 1994 Berkshire Hathaway Annual Meeting, Buffett explained, “I’ve said in investing, in the past, that there’s more than one way to get to heaven. And there isn’t a true religion in this, but there’s some very useful religions.”

This insight highlights that while Buffett’s limited portfolio strategy has been incredibly successful, other methods—such as Peter Lynch’s growth-oriented approach with a much more diversified portfolio—can also yield great results. The key is finding a disciplined, well-researched strategy that aligns with one’s expertise and risk tolerance.

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.

Warren Buffett believes that how a company navigates challenges reveals critical insights about its true resilience and competitive advantage. A business that endures hardship and emerges stronger demonstrates not only its durability but also the strength of its economic moat—the protective advantage that keeps competitors at bay.

At the 2000 Berkshire Hathaway Annual Meeting, Buffett explained, “If you see a business take a lot of adversity and still do well, that tells you something about the underlying strength of the business.” He cited Coca-Cola as an example, noting how the company overcame setbacks such as the New Coke failure and issues in Europe, only to rebound stronger each time.

For investors, these moments of adversity serve as valuable tests. Companies that can weather difficulties and maintain their competitive edge often have the resilience and structural advantages necessary for long-term success.

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.