The wisdom of Warren Buffett is something that countless investors have attempted to distil. As you’ll quickly discover, the Oracle of Omaha’s mind + mentality simply cannot be summarised in its entirety via wikiHow articles or any number of A Dummies’ Guide instalments. The man behind Berkshire Hathaway did, however, offer quite an insightful interview segment almost forty years ago that encapsulates his core investing philosophy, aptly dubbed by whoever uploaded the invaluable archival footage: Warren Buffett – How To Pick Stocks & Get Rich (1985).
“The first rule of investment is don’t lose,” Buffett opens with.
“And the second rule of investment is don’t forget the first rule… and that’s all the rules there are. If you buy things for far below what they’re worth, and you buy a group of them, you basically don’t lose money.”
The conversation soon navigates to what would otherwise be more nebulous topics which Warren Buffett somehow manages to break down for easy viewing – ranging from the most important quality an investment manager can have (“It’s a temperamental quality, not an intellectual quality… you don’t need tons of IQ in this business.”); what he did/does differently in comparison to 90% of other money managers (“All the ticker tells me is the price… but prices don’t tell me anything about a business. I would rather value a business or a stock first before knowing the price.”); combatting investment FOMO – an exceedingly crucial lesson in the era of cryptocurrencies – (“I don’t have to make money in every game, I don’t know what cocoa beans are going to do, there’s all kind of things I don’t know about.”); and plenty more.
But digestibility isn’t even the most incredible aspect of what you’re about to experience… it’s the fact that forty years on, Buffett has been remarkably consistent in his beliefs. And it’s clearly paid off given he currently retains a net worth of well over $100 billion while Berkshire Hathaway is ticking along just fine (and will continue to tick along just fine under the leadership of his recently announced successor, Greg Abel).
Check out Warren Buffett – How To Pick Stocks & Get Rich (1985) above.