Category: Lessons From Warren Buffett

We all have epiphanies that change our lives, and for Warren Buffett it was the moment that he realized the lengths that people will go to engage in gambling behavior, even when they know the odds insure that in the end they will lose. It was a moment that cemented the advantage the disciplined investor has over the gambler.

“I walked into this casino, the Flamingo, it was kind of a motel-like arrangement, and I was 21 and my bride was 19,” Warren Buffett said at the 2022 Berkshire Hathaway Annual Meeting. “And I looked around the room and there were all of these people, and they were better dressed then, it was a more dignified group than, perhaps, currently, but they had flown thousands of miles in some cases, you know, in planes that weren’t as fast as the current ones and were more expensive, probably, on a per-mile basis, adjusted, then. They’d gone to great lengths to come out to do something that was mathematically unintelligent, and they knew it was unintelligent. And, I mean, they couldn’t do it fast enough, in terms of rolling the dice, you know, and trying to determine whether they were hot or whatever they may be. And I looked around at that group. And everybody there knew that they were doing something that was mathematically dumb, and they’d come thousands of miles to do it. And I said to my wife, I said, ‘You know, I’m going to get rich. I mean, how can you miss? If people are willing to do this, you know, this is a land of opportunity.'”

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© 2023 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.

For the vast majority of investors, their holdings represent mere fragments of the corporate landscape, small pieces in a sprawling puzzle. In this realm of small-scale participation, there exists a source of solace. As Warren Buffett sagely observes, take heed that even though your stake may be modest, it has the potential to bear a favorable price tag, one that might surpass the acquisition cost borne by those wielding the means to claim entire companies. So, in this world of fractional ownership, the discerning small investor, with an eye for value, can often secure a more advantageous entry point, savoring a unique advantage amidst the grand tapestry of the market.

“You will never make the kind of buy in a negotiated purchase that you can make via stocks in a weak stock market. It just isn’t going to happen,” Buffett said at the 2019 Berkshire Hathaway annual meeting. “The person on the other side cares too much. Whereas, in the stock market, in a 1973 or 1974, you were dealing with the marginal seller. And whatever price they establish for the business, you could buy it. I couldn’t have bought the entire Washington Post Company for $80 million in 1974. But I could buy 10 percent of it from a bunch of people who were just operating, you know, based on calculating betas or doing something of the sort. And they were in a terrible market. And it was possible to buy a piece of it on that valuation. You never get that kind of buy in a negotiated purchase.”

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© 2023 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.

In the swirling sea of investment advice, a cacophony of opinions echoes from every corner of the financial world—investors, hedge fund maestros, astute analysts, and the clamorous financial media all clamor for your attention. Amidst this tumult, Warren Buffett offers a remarkably simple yet profound prescription: pay heed to none. Instead, he exhorts the discerning investor to embark on their own voyage of financial discovery, to meticulously undertake their own due diligence. In the end, it is not the cacophony of external counsel, but the whispered wisdom of one’s own research that may prove to be the most reliable guide in the labyrinthine realm of stock markets.

“On any given day, two million shares of Coca-Cola may trade. That’s a lot of people selling, a lot of people buying. If you talk to one person, you’d hear one thing, and you’d talk to another — you really should not make decisions in securities based on what other people think,” Warren Buffett said at the 1994 Berkshire Hathaway Annual Meeting. “A public opinion poll will not get you rich on Wall Street. So you really want to stick with businesses that you feel you can somehow evaluate yourself.”

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© 2023 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.

In the throes of speculative mania, when even the most unprofitable stocks are propelled skyward, it’s all too tempting to lose sight of a fundamental truth: enduring triumph in the realm of investment hinges not on the capricious dance of stock prices but on the bedrock of a company’s profitability. Amidst the frenzy,Warren Buffett points out that the enduring value of an investment is inexorably bound to the prosperity of the underlying business, not the ephemeral whims of the market.

“The only money investors are going to make, in the long run, are what the businesses make,” Buffett said at the 1999 Berkshire Hathaway annual meeting. “I mean, there is nothing added. The government doesn’t throw in anything. You know, nobody’s adding to the pot. People are taking out from the pot, in terms of frictional cost, investment management fees, brokerage commissions and all of that.”

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© 2023 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 an investor that has truly scaled his investments to a size that is almost impossible to conceive. However, Buffett is quick to point out that compounding small sums is much easier than large. And the larger the sum you start with, the harder it become to continue to compound it over time.

“I think, working with a very small sum, that there is an opportunity to earn very high returns,” Buffett said at the 1999 Berkshire Hathaway annual meeting. “But that advantage disappears very rapidly as the money compounds.”

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© 2023 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.

One of the best safeguards against the erosive tides of inflation extends beyond the mere amalgamation of assets within one’s investment portfolio, notes Warren Buffett. Equally if not surpassingly pivotal, lies the endeavor to enhance one’s own intrinsic value to the utmost degree conceivable.

“The best thing you can do is to be exceptionally good at something. If you’re the best doctor in town, if you’re the best lawyer in town, if you’re the best whatever it may be, no matter whether people are paying you with a zillion dollars, they’re going to give you some of what they produce in exchange for what you deliver,” Warren Buffett said at the 2022 Berkshire Hathaway Annual Meeting. “And if you’re the one they pick out to do any particular activity, sing, or play baseball, or be their lawyer, whatever it may be, whatever abilities you have can’t be taken away from you, they can’t actually be inflated away from you.”

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© 2023 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 you see an investor such as Warren Buffett buying whole companies, you might think that as a small investor you can’t get the bargains that huge investors can get. However, Buffett disagrees. Although he prefers to buy whole companies, he recognizes that buying pieces of companies often represents better value, as you don’t have to pay a premium for them.

“We’ve always wanted to acquire entire businesses. People never seem to really believe that, back when we were buying See’s Candy or the Buffalo News or National Indemnity. But that’s been our number one preference right along,” Buffett said at the 1999 Berkshire Hathaway annual meeting. “It’s just that we’ve found that much of the time we could get far for more our money, in terms of wonderful businesses, by buying pieces in the stock market, than we could by negotiated purchase.”

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© 2023 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.

Few can hope to reach the heights of investing genius embodied by Warren Buffett. However, Buffett himself humbly suggests that the majority of profitable investments do not spring from extraordinary brilliance, but rather arise from astutely capitalizing on the missteps of others. In essence, success in the realm of investment hinges on an ability to recognize and seize upon the errors committed by one’s counterparts. This notion underscores the critical importance of a shrewd and discerning mindset in navigating the complex and ever-shifting terrain of financial markets.

“What gives you opportunities is other people doing dumb things,” Buffett said at the 2023 Berkshire Hathaway annual meeting. “Well, the 58 years we’ve been running Berkshire, I would say there’s been a great increase in the number of people doing dumb things. And they do big, dumb things, and the reason they do it to some extent is because they can get money from other people so much easier than when we started.”

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© 2023 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, in his characteristic wisdom, emphasizes that investors need not dwell on a business’s past actions but should instead focus on its future endeavors. He understands that the past is not always a reliable predictor of a company’s trajectory. For Buffett, true investing lies in peering into the horizon, discerning the opportunities that lie ahead. As he aptly puts it, “That’s what investing is, is seeing out.”

“You don’t get paid for what’s already happened. You only get paid for what’s going to happen in the future,” Warren Buffett said at the 2007 Berkshire Hathaway Annual Meeting. “The past is only useful to you in the extent to which it gives you insights into the future, and sometimes the past doesn’t give you any insights into the future.”

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© 2023 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.