Category: Lessons From Warren Buffett

Warren Buffett has long emphasized simplicity and discipline when evaluating potential investments. At Berkshire Hathaway’s 1995 annual meeting, he explained the two threshold questions he always asks before committing capital.

“The first question is, can I understand it?” Buffett said, noting that he avoids businesses outside his circle of competence, such as software or biotech. “There’s no sense kidding myself into thinking that I’m going to understand some software company … what the hell am I going to know about it?”

Once he clears that hurdle, Buffett turns to the second question: does the business have strong economics? Specifically, he looks for companies that consistently earn high returns on capital.

These two principles—understandability and solid economics—remain cornerstones of Buffett’s investing approach.

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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.

If you take a company that, in the end, never makes any money, but trades, changes hands, representing a valuation of $10 or $20 billion for some time, there’s no wealth created. There’s a tremendous amount of wealth transferred.

…but in the end the only wealth creation comes about through what the business creates.

There’s no magic to it. If a company that’s not worth anything sells for $20 billion and 5 percent of it changes hands, somebody takes a billion dollars from somebody else. But investors as whole gain nothing.

They all feel richer. It’s a very interesting phenomenon. But they can’t be richer, except as a group, unless the company makes them richer.

And it’s the same principle as a chain letter. If you’re very early on a chain letter you can make money. There’s no money created by chain letters. In fact, there’s the frictional cost of envelopes, and postage, and that sort of thing.

So the net, there’s some money destroyed a little bit. And there’s money destroyed by the frictional cost of trading and investing, and that comes out of investor’s pockets.

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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.

Warren Buffett has emphasized that stock prices often diverge from a company’s true value during periods of heavy speculation, but ultimately align with fundamentals over time.

Speaking at Berkshire Hathaway’s 2000 annual meeting, Buffett cited his mentor Benjamin Graham’s observation from The Intelligent Investor: “In the short run it’s a voting machine, and in the long run it’s a weighing machine.”

Buffett added, “Sooner or later, the amount of cash that a business can disgorge in the future governs the value it has… But it can take a long time.”

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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.

Warren Buffett has long cautioned investors about the dangers of leverage, the practice of using borrowed money to boost returns. While it may seem attractive, he warns it can quickly destroy even the most successful investors when markets shift.

“Whenever a bright person, a really bright person, goes broke that has a lot of money, it’s because of leverage,” Buffett told shareholders at Berkshire Hathaway’s 1999 annual meeting. “It would be almost impossible to go broke without borrowed money being in the equation.”

For Buffett, the lesson is clear: long-term success in investing comes from patience and discipline, not debt-fueled risk.

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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.

Warren Buffett says investors should focus less on rigid formulas like price-to-earnings ratios and more on where a company is headed. Speaking at Berkshire Hathaway’s 1995 annual meeting, Buffett drew on advice from hockey great Wayne Gretzky: “Go where the puck is going to be, not where it is.”

“It’s the future that counts,” Buffett emphasized, “It isn’t a multiple of today’s earnings that are primarily determinative of things.” He underscored that long-term success in investing comes from anticipating future performance rather than relying solely on current metrics.

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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.

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.

Warren Buffett has long been known for steering clear of Wall Street trends, and one metric he’s never relied on is beta—a measure of a stock’s historical volatility. Speaking at the 1998 Berkshire Hathaway Annual Meeting, Buffett made his position clear: “We don’t pay any attention to beta or any of that sort of thing. It just doesn’t mean anything to us.”

Instead, Buffett emphasized a focus on intrinsic value and price, saying, “We’re only interested in price and value. And that’s what we’re focusing on all the time. Any kind of market movements or anything don’t mean anything.”

Buffett’s remarks highlight a core principle of his investment philosophy: long-term value outweighs short-term volatility.

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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.

When people begin exploring the world of investing, it’s common to ask: Should I put my money in stocks, real estate, commodities, or currencies? For Warren Buffett, the answer is surprisingly personal—he believes the best investment you can make is in yourself.

“I think that the best investment you can have, for most people, is in your own abilities,” Buffett said at the 2005 Berkshire Hathaway Annual Meeting.

To underscore the value of personal potential, Buffett offered a striking analogy: “I would be glad to pay [a student] one hundred thousand dollars, cash up front, for ten percent of all their future earnings… I’m valuing the whole person at a million dollars.”

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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.

While strong leadership is valuable, Warren Buffett believes that the true cornerstone of a great investment is a business with a powerful competitive moat.

“If you have a big enough moat, you don’t need as much management,” Buffett said at the 1999 Berkshire Hathaway Annual Meeting, echoing a core principle of his investment philosophy.

He referenced investor Peter Lynch’s famous line about preferring companies so resilient that “an idiot can run it, because sooner or later one will.” The point, Buffett explained, is that truly great businesses are those protected by enduring advantages—moats that safeguard profitability regardless of who’s at the helm.

Such businesses are rare, Buffett admits, but when found, they offer investors the kind of long-term security that even top-tier management alone can’t guarantee.

Hear Buffett’s full explanation

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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.

Conventional wisdom suggests investors should aim to buy low and sell high—ideally at a stock’s peak. But Warren Buffett takes a different view.

At the 1998 Berkshire Hathaway Annual Meeting, Buffett explained that he’s unbothered when stocks he’s sold go on to climb higher. In fact, he sees it as a positive sign.

“I would worry, frankly, if I sold a bunch of things right at the top,” he said. “That would indicate that I was practicing the bigger fool-type approach to investing, and I don’t think that can be practiced successfully over time.”

Instead, Buffett believes selling a stock that later rises even more is often a sign that you’ve invested in strong businesses—exactly what a long-term investor should aim to do.

Hear Buffett’s full explanation

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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.