May 22 • 2 min read
Invest Like Buffett: 4 Key Lessons
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Aside from the recent news on tariffs, the business world is buzzing about Warren Buffett's upcoming retirement as CEO of Berkshire Hathaway. After an incredible 83-year investing career, Buffett—who bought his first stock at age 11—is stepping down at 94. Although many have tried (and failed) to copy Buffett’s legendary approach, he's consistently highlighted a few key ideas that any investor can adopt. In today's email, I'm highlighting four of Buffett's timeless insights that closely align with my own investing philosophy. Buffett repeats these principles for a reason: They're foundational to successful investing. Following his lead, I’ve also emphasized these lessons throughout my work over the years. Let's dive in. The Warren Buffett Blueprint (4 Principles)1. Equities Are Buffett’s Primary Choice for Long-Term Investors It's well known that Buffett’s long-term track record stems from investing most of his money in the world's great companies. Over Buffett’s 80 years of investing, that preference has never wavered. In his most recent shareholder letter, he reiterated that equities remain his preferred choice when he said: "Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities. That preference won’t change." Beyond this simple statement, Buffett offered a deeper look into why equities have been his lifelong preferred investment vehicle. He shared this logic in his 2011 shareholder letter, which is well worth the read. 2. Ignore ALL Market Forecasts During the 1999 shareholder meeting, Buffett said the following: "We have no idea whether the market is going to go up today, next week, next month, or next year…I know of no one who has been successful and really made a lot of money predicting the actions of the market itself." It's fascinating that Buffett often claims he doesn't know what will happen in the market. Yet, market forecasts take up a disproportionate share of financial media coverage. Considering this disconnect, we should routinely ask ourselves: If Warren Buffett doesn’t know what the market will do next, how likely is it that some media pundit will be right about the future? 🤔 3. Volatility is the Friend of Long-Term Investors While many investors fear market volatility, Buffett has long counseled investors to use market declines to their advantage. Almost comically, Buffett said the following in a 2012 shareholder meeting: “The beauty of stocks is that they sell at silly prices from time to time. That’s how Charlie and I have gotten rich.” Throughout his career, Buffett has consistently emphasized that market declines create valuable opportunities for long-term investors. As he famously advises, “…be greedy when others are fearful.” The past decade—and indeed, the past century—has repeatedly validated Buffett’s perspective. Given this track record, it's reasonable to expect this trend of opportunity to continue. 4. Be a Permanent Owner of Equities One of Buffett’s most famous quotes is also one of his shortest: “Our favorite holding period is forever.” As is evident throughout his early partnership letters, Buffett understood the long-term value of compound interest better than most. Simple math shows that most of the benefits of compounding occur many years after your initial investment. Therefore, your long-term returns depend primarily on two factors: Choosing the right assets AND holding them without interruption. Compounding rewards patience. For that reason, I frequently stress the importance of being permanent owners of equities (in addition to other prudent asset classes in our portfolio). While there are no guarantees in investing, embracing these four timeless ideas can significantly improve anyone's chances of success. My hope is that this includes all of us. Stay wealthy, Taylor Schulte, CFP® |