It is not for nothing that he is given the title “Oracle of Omaha”.
As one of the most successful investors in the world, Warren Buffett’s views on markets, companies and the economy have always aroused great interest on Wall Street and ordinary people.
At age 95, 60 years after acquiring controlling interest in the company.
But throughout his long career, the billionaire has had many sensible things to say about investing well and living a good life through the work you choose and the way you treat people.
Here’s just a sample:
Don’t lose money
“The first rule of investing is don’t lose. And the second rule of investing is don’t forget the first rule.”
Buffett is best known as a value investor – someone who buys companies that he believes are undervalued.
“If you buy things at a price well below what they’re worth and you buy a bunch of them, you basically don’t lose any money,” he explained on Adam Smith’s Money World show.
But Buffett’s advice also highlights the need to diversify risk.
“It’s the foundation of how I manage my clients’ money,” said Brian Kearns, certified financial planner and certified public accountant.
“Investing is about growth, but also about preserving capital. […] Look for reasonably priced investments […] but don’t risk too much of your net worth on a single idea.”
This also means investing across multiple asset classes. “They all have different risk profiles and, when combined, allow you to maintain investments over the long term, as volatility is lower,” said Kearns.
Focus on the essentials
“Discover what is important and knowable.”
At an event at the University of Florida in 1998, Buffett said he does not consider macroeconomic forecasts when deciding on an investment.
“We never stop buying or buy a company because of any macroeconomic sentiment, because it doesn’t make any difference.”
Certified financial planner Adam Grossman explains it to clients this way: “While the future direction of the economy is important, it is unpredictable. For this reason, Buffett says investors should avoid making predictions and definitely avoid listening to other people’s predictions.”
Don’t complicate things
“Ignore the negative reviews and keep your costs to a minimum.”
Most people are not investment professionals. But they can have a diverse and successful investment strategy that is simple and affordable.
“You don’t need to be an expert to get good investment returns. But if you’re not […] follow a path that is sure to work reasonably well. Keep things simple and don’t try to risk everything at once,” Buffett advised in his 2013 letter to shareholders.
It’s the same advice he said he gave to the trustee of the money he was leaving his wife.
“It couldn’t be simpler: Invest 10% of your money in short-term government bonds and 90% in a very low-cost S&P 500 index fund,” Buffett wrote.
“I believe that the long-term results of the fund, with this strategy, will be superior to those obtained by most investors […] who hire managers with high management fees.”
Don’t save sex for old age
“You don’t want to spend your life sleepwalking.”
At an event with MBA students in 2008, Buffett said he was picked up at the airport by a 30-year-old Harvard Business School student who was already a certified public accountant and thought a job in management consulting “would be the perfect culmination of his resume.”
“I said, ’30 years and you’ve got all this and you’re still thinking about spending a few more years doing something you don’t really want to do just to make your CV even better?’ I said that sounds a bit like saving sex for old age.”
Buffett suggested that, as much as possible, students worry less about making a lot of money and more about working “for an organization or person they really admire.”
Years later, on The David Rubenstein Show, he said this: “Look for the job you would like to have if you didn’t need a job.”
Avoid credit card debt
“Avoid credit cards. Just forget about them.”
While speaking at a forum with Nebraska students many years ago, Buffett emphasized one point: “And you’re not going to get ahead in your financial life by borrowing money at 18% or 20% interest.”
His advice: “If you can’t afford it, don’t buy it.”
Choose your life partner wisely
“The most important thing is to find the right spouse.”
Buffett frequently praised his late wife, Susan, with whom he had three children; and his second wife, Astrid.
He often advises that one of the keys to a happy life is sharing it with the right person.
“What qualities do you look for in a spouse? Humor, appearance, character, intelligence, or simply someone with low expectations?” he said at the 2008 event. “If you make the right decision, I guarantee you will have a good outcome in life.”
Kindness is the key to greatness
Buffett has suggested several times that you can always decide to improve yourself — a theme he revisited in his Thanksgiving letter this year.
“Decide what you would like your obituary to say and live the life to deserve it,” he recommended.
“Greatness is not achieved by accumulating large amounts of money, a lot of publicity, or great power in government,” he wrote.
“When you help someone in a thousand different ways, you help the world. Kindness is costless, but it’s also priceless. Whether you’re religious or not, it’s hard to beat the Golden Rule as a guide to conduct.”
