Many investors search for a clear-cut formula to guide their decisions—something that can signal exactly when to buy. But according to Warren Buffett, successful investing isn’t that mechanical.
“People always want a formula,” Buffett said at the 2002 Berkshire Hathaway Annual Meeting. “They go to The Intelligent Investor and they think, you know, somewhere they’re going to give me a little formula and then I can plug this in and I know I’ll make lots of money. And it really doesn’t work that way.”
Instead, Buffett emphasizes a deeper, more thoughtful approach: estimate the total cash a business will generate over its lifetime, discount it appropriately, and only invest when the price is well below that value. “I wouldn’t want to have a single yardstick, or a…relative P/E that I went by,” he added.
The lesson? Real investing success requires judgment, patience, and a willingness to think beyond shortcuts.
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© 2026 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.