Tag: Value Investing

Trying to recover losses by pouring more money into a struggling stock is a common mistake—and one that Warren Buffett warns against.

At the 1995 Berkshire Hathaway Annual Meeting, Buffett emphasized a key investing principle: “You don’t have to make it back the way you lost it. And in fact, it’s usually a mistake to try and make it back the way that you lost it.”

In other words, there’s no need to stick with a losing investment in the hope it will rebound. The market offers countless other opportunities. Clinging to a poor performer can tie up capital that could be better used elsewhere.

Buffett’s advice is simple: let go of emotional attachments to past losses, and focus instead on smarter, more promising investments going forward.

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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.

For long-term business success, few factors are as important as the quality of a company’s management. Warren Buffett believes that investors should focus on two key areas when evaluating leadership.

At the 1994 Berkshire Hathaway Annual Meeting, Buffett explained, “You judge management by two yardsticks: how well they run the business, and how well they treat their shareholders.”

The first involves understanding the business and assessing how management has performed over time—especially how they’ve allocated capital compared to competitors. It’s essential to consider the conditions they inherited and how effectively they’ve handled them.

The second measure is shareholder treatment. According to Buffett, good managers tend to act in the best interest of owners, while poor ones often neglect shareholders.

In Buffett’s experience, these two traits usually go hand in hand: managers who perform poorly often show little regard for shareholders. For investors, that’s a red flag worth watching.

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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.

Risk often hides in plain sight—unseen until something goes wrong. It’s only when markets crash, companies collapse, or insurers face massive claims that the true extent of risk becomes evident.

Warren Buffett famously captured this idea at the 1994 Berkshire Hathaway Annual Meeting: “You don’t find out who’s been swimming naked until the tide goes out.” He emphasized that this principle applies not only to stocks but also to bonds and reinsurance.

Investors chasing high returns through risky bonds or insurers writing questionable policies may seem smart in calm conditions. But when adversity strikes, those decisions are quickly exposed, sometimes with devastating consequences.

Buffett notes that reinsurance, in particular, can be deceptive. “You can be doing dumb things and not know it,” Buffett warned. “Then all of a sudden wake up and find out the money is gone.”

The takeaway? Risk is often invisible—until it’s too late.

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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.

Investing is about making your money grow—but according to Warren Buffett, there are moments when preserving liquidity is more critical than chasing returns. In those situations, cash isn’t just helpful—it’s essential.

At the 2022 Berkshire Hathaway Annual Meeting, Buffett compared cash to something even more fundamental: “It’s like oxygen. It’s there all the time, but if it disappears for a few minutes, it’s all over.”

He emphasized that while opportunities to invest and grow wealth are important, so is the ability to stay in the game. “There have been a few times in history, and there will be more… where if you don’t have [cash], you don’t get to play the next day.”

Buffett’s message is clear: cash might not earn high returns, but in times of crisis, it provides the flexibility and stability needed to survive—and eventually thrive.

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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.

With countless opinions and forecasts swirling around the stock market’s future, it’s easy to feel compelled to form your own outlook—bullish or bearish—to guide your investment strategy. But legendary investor Warren Buffett advises against it.

At the 1994 Berkshire Hathaway Annual Meeting, Buffett made it clear: trying to predict market movements is not just unhelpful—it can be distracting. “Charlie and I never have an opinion about the market because it wouldn’t be any good,” he said. Instead of speculating on what the market might do, Buffett focuses on what he can know: the quality of individual businesses.

He warns that basing investment decisions on market predictions means potentially ignoring solid opportunities simply because of fears about the broader market. “To give up something that you do know and that is profitable for something that you don’t know and won’t know… it just doesn’t make any sense to us,” Buffett explained.

In short, don’t get caught up in trying to guess the market’s next move. Focus instead on identifying great businesses—and let the rest take care of itself.

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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.

Warren Buffett has long championed simple, long-term investing strategies—and one of the simplest, in his view, is benefiting from share buybacks.

At the 2022 Berkshire Hathaway Annual Meeting, Buffett explained how Berkshire’s stake in American Express grew dramatically over time without the company purchasing more shares. “We owned 150 million shares… and we then owned 11.2% of the American Express Company,” Buffett said. “And now we own 20%.” The reason? American Express has steadily repurchased its own shares, effectively increasing Berkshire’s ownership percentage—without Berkshire spending another dollar.

Buffett likened it to owning a farm that magically expands over time: “Imagine if you had 640 acres and, twenty years later, it had turned into 1,100 or 1,200 acres—without buying more land. That’s essentially what happens when a company buys back its own shares wisely.”

For investors, this means enjoying an ever-larger piece of a growing business, tax-free, and with no effort. Buffett calls it “the easiest investing there is.” His message: when done at the right price, share repurchases are one of the most powerful, yet misunderstood, tools for wealth creation.

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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 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.”

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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.

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

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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.

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

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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.

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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.

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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.