Month: December 2024

For some investors, the rise of “meme stocks,” sky-high valuations on unprofitable companies, and other speculative behaviors signal a need to leave the market or adopt more conservative strategies. Warren Buffett, however, sees these trends as nothing new. Long before the meme stock era, Buffett observed speculation as a recurring part of the market, one that doesn’t influence his approach.

“We’re trying to find wonderful businesses,” Buffett remarked. “The fact that a part of the market is kind of screwy, that’s unimportant to us.” He and his partner Charlie Munger have seen countless cases of overpriced stocks, misleading promotions, and unsustainable promises. As Buffett said in 1996, “It always will go on. And it doesn’t make any difference to us.”

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© 2024 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.

Gold is often hailed as a reliable inflation hedge, but Warren Buffett has long challenged this view, emphasizing his preference for productive assets over non-productive ones like gold. Speaking at the 2005 Berkshire Hathaway Annual Meeting, Buffett highlighted why he believes gold’s utility as an investment is overrated.

“Historically, people saw gold as a refuge from declining currency value,” Buffett said. “But so is a barrel of oil, an acre of land, or a piece of Coca-Cola. Assets that serve a real purpose, like See’s Candy, will retain value regardless of the currency’s condition. If the dollar loses half its value, we’d simply sell See’s Candy for double the price and maintain the same real value.”

Buffett contrasted the tangible utility of productive businesses with gold, which he sees as speculative and lacking intrinsic value. Reflecting on his father’s enthusiasm for gold in the 1940s, Buffett noted that while gold prices rose from $35 an ounce to over $400 in 65 years, the compounded returns, after storage and insurance costs, were unimpressive.

For Buffett, the key lies in owning assets that produce goods or services people will always need, regardless of economic conditions. “We wouldn’t trade ownership of productive assets for a hunk of yellow metal,” he concluded.

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 2024 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 has spent years learning from the mistakes of others, especially in the financial world. Along with his long-time business partner, Charlie Munger, Buffett has become a dedicated student of human folly, particularly in finance.

At the 2012 Berkshire Hathaway Annual Meeting, Buffett shared his fascination with studying financial disasters. “I’ve always been absolutely absorbed with reading about disasters,” he said, highlighting how understanding human error, especially in finance, has given him a strategic advantage over others. Buffett believes that many highly intelligent individuals often overlook basic human behavior, which can lead to disastrous decisions, as was seen in the 2008 financial crisis.

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 2024 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.

The world of investing is full of endless advice, opinions, and strategies, often making it difficult for investors to stay focused. However, Warren Buffett, one of the world’s most successful investors, has long emphasized the importance of consistency in building wealth. At the 1994 Berkshire Hathaway Annual Meeting, he put it simply: “You cannot get rich with a weather vane.”

“We don’t pay attention to what people say,” Buffett notes. Buffett’s point is that constantly shifting strategies based on market predictions or analysts’ opinions is a poor approach to investing. He believes in sticking to a well-considered, long-term strategy, regardless of market chatter. In his view, reacting to every new piece of investment advice, especially about the future direction of the economy or stock prices, is likely to lead to poor results. Instead, Buffett encourages investors to ignore the noise and stay committed to their own approach.

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 2024 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.