Mazor'sEdge

Warren Buffett believes one of the most valuable skills a CEO can develop is a solid understanding of investing. What puzzles him, however, is how some top executives shy away from managing their own personal finances but still feel equipped to make billion-dollar corporate decisions.

At the 2005 Berkshire Hathaway Annual Meeting, Buffett shared his thoughts on this contradiction. “I have friends who are CEOs, and they’ll let someone else handle their money,” he said. “Ask them whether to invest in Coca-Cola or Gillette, and they’ll say, ‘That’s too tough. I don’t know anything about investing.’”

Yet, the very next day, these same executives may greenlight a $3 billion acquisition after a brief presentation from an investment banker. “They’ll hand it over to a strategic planning group and believe they’re fit to make a decision on a multibillion-dollar deal,” Buffett said, “when they don’t even feel confident making $10,000 decisions with their own money.”

Buffett’s point is clear: true business leadership should include a deep understanding of investment principles—especially when the stakes are high.

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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.

Risk is a quiet companion, rarely announcing itself until it’s too late. Markets can climb for years, making investors feel invincible. Companies can expand recklessly, and insurers can write policies with blind confidence. Then, in a moment—a market crash, a corporate collapse, or a disaster triggering massive claims—the true weight of risk is revealed.

Warren Buffett, ever the master of analogy, put it succinctly: “You don’t find out who’s been swimming naked until the tide goes out.” The illusion of safety vanishes when conditions turn.

This principle applies broadly. Bond investors chasing yield in risky debt may look brilliant—until defaults spike. Insurers collecting premiums on underpriced policies seem prudent—until a catastrophe wipes out their reserves. Reinsurers, in particular, can go years writing bad business without realizing it. Then, suddenly, the reckoning comes.

As Buffett observed, “You can be doing dumb things and not know it in reinsurance, and then all of a sudden wake up and find out the money is gone.”

The lesson? True financial mastery lies in foreseeing risks as well as opportunities. The best investors, like the best swimmers, know to check the tide before diving in.

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.

At the 2013 Berkshire Hathaway Annual Meeting, Warren Buffett offered a candid take on the corporate buzzword “synergy.” According to Buffett, it’s often just a euphemism for mass layoffs—especially targeting the very employees who built the company’s success.

“They would have all these ideas about synergy,” Buffett said, “and synergy would mean that the people that had helped him build the business over 30 years would all get sacked.” He likened the acquiring companies to Attila the Hun, sweeping in and displacing long-standing employees in the name of efficiency. Buffett made it clear: he had no interest in deals that rewarded cost-cutting at the expense of loyal people.

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 is always on the lookout for undervalued stocks and businesses, but he never forgets the importance of maintaining liquidity. No matter how attractive an investment opportunity may seem, ensuring sufficient cash reserves is key to financial stability.

At the 2012 Berkshire Hathaway Annual Meeting, Buffett emphasized this principle: “We know we don’t want to go broke… And we know you can’t go broke if you’ve got a fair amount of liquid reserves around and you don’t have any near-term debts.”

This highlights a fundamental rule of investing—having liquidity protects against unforeseen downturns and allows investors to seize opportunities without financial strain. No matter the market conditions, maintaining a strong cash position is a strategy that ensures 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.