Category: Lessons From Warren Buffett

If there’s one piece of advice Warren Buffett consistently shares for those who want to become better investors, it’s this: read constantly.

At the 2005 Berkshire Hathaway Annual Meeting, Buffett reflected on how reading shaped his early investing journey. “I just read a lot,” he said. “I probably took every book in the Omaha Public Library, every book they had on investing or the stock market, basically.”

That passion for reading started young. By age 11, he had read enough to feel ready to buy his first stock. When his father was elected to Congress, Buffett gained access to even more books through the libraries in Washington, D.C.—and he took full advantage.

He dived into charts, studied market history, and explored every investing resource he could find. The turning point came at age 19 when he discovered The Intelligent Investor by Benjamin Graham while attending the University of Nebraska. “That just changed my whole framework,” Buffett said.

His enduring advice for anyone looking to improve their investment knowledge? “Read everything in sight.”

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.

At the 2006 Berkshire Hathaway Annual Meeting, Warren Buffett emphasized a core principle of successful investing: independent thinking grounded in solid facts and reasoning.

Quoting his mentor Ben Graham, Buffett reminded investors that being right isn’t about consensus—it’s about accuracy. “You’re neither right nor wrong because people agree with you or disagree with you,” he said. “You’re right because your facts and reasoning are right.”

Buffett stressed the importance of focusing only on what is both important and knowable. Investors should avoid being distracted by speculation or public opinion and instead concentrate on verifiable facts and what those facts truly mean. He warned against wasting energy on unknowable variables—no matter how important they might seem—or knowable facts that don’t actually matter.

Ultimately, Buffett’s message is clear: investing is not about following the crowd. It’s about finding valuable opportunities through disciplined, independent analysis—regardless of what others think.

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.

Will the stock market go up or down? Flip on the television, open a newspaper, or browse the internet, and you’ll find no shortage of confident predictions. Some say a crash is imminent; others foresee a roaring bull market. It’s tempting to weigh the arguments, form an opinion, and adjust your investments accordingly. Warren Buffett advises against it.

“Charlie and I never have an opinion about the market because it wouldn’t be any good and it might interfere with the opinions we have that are good,” Buffett said at the 1994 Berkshire Hathaway Annual Meeting.

His reasoning is simple: The future of the market is unknowable, but the value of a great business is not. A sound company with strong earnings, a durable competitive advantage, and competent management will perform well over time—regardless of market swings. To hold off on a promising investment just because of macroeconomic uncertainty is, in Buffett’s view, sheer folly.

“If we’re right about a business… it would be very foolish for us not to take action because we thought something about what the market was going to do,” he explained. “Because we just don’t know.”

The lesson is clear: Don’t let noise drown out knowledge. Market movements are unpredictable, but great businesses endure. The wise investor ignores the forecasts and focuses on what can actually be known.

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.

(BRK.A), (BRK.B)

Warren Buffett credits an ancient storyteller with delivering one of the earliest — and most enduring — lessons in investing: Aesop.

At the 2000 Berkshire Hathaway Annual Meeting, Buffett highlighted the fable writer’s well-known proverb: “A bird in the hand is worth two in the bush.” According to Buffett, this simple line captures the core of investment thinking.

“It’s an investment equation,” Buffett explained. “You trade a bird in the hand — your money today — for the possibility of more birds in the bush — future returns. But the decision hinges on a few critical factors: how many birds are actually in the bush, when you’ll get them, and the prevailing interest rates.”

Buffett illustrated that if you expect to receive two birds in five years, and interest rates are low (say, 5%), it may be a good trade. But if rates are high (like 20%), holding onto the bird in hand and compounding it could yield a better return.

He emphasized that evaluating growth — or future gains — always requires context: timing, alternative opportunities, and the cost of capital.

In essence, Buffett said, investing is all about value: “What is it worth? How many birds are in the bush? When will you get them? And what are the interest rates?”

Aesop may not have had a finance degree, but Buffett believes his fable laid the groundwork for 2,600 years of investment insight.

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 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.

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.

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.

Excessive speculation has repeatedly led to the downfall of investors and markets. As Warren Buffett explains, it often begins with early investors identifying a genuine, overlooked opportunity. However, as word spreads, the investment loses its connection to fundamentals and turns into pure speculation—inevitably leading to a crash.

At the 2006 Berkshire Hathaway Annual Meeting, Buffett summed it up succinctly: “What the wise man does in the beginning, the fool does in the end.” He pointed out that asset classes initially driven by strong fundamentals eventually attract speculative interest, which can spiral out of control. A classic example is the infamous tulip mania in Holland in the 17th century, where the initial value of tulips was rational but soon became wildly inflated due to speculative frenzy.

This cycle repeats throughout history: early investors profit based on fundamentals, but as greed and envy take hold, speculation dominates, and the bubble bursts. The lesson? Investors must remain cautious and avoid being swept up in speculative manias detached from intrinsic value.

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.

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.

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.