In the investing world, my #1 hero is Warren Buffett. This 93-year-old Nebraskan has been investing for 80 years, since age 13. Furthermore, 99-year-old Charlie Munger — Buffett’s long-term business partner — is also among the world’s wisest investors.
Known as the ‘Oracle of Omaha’, Buffett has a net worth of $121bn. He’s also the world’s most generous philanthropist, having already donated $55bn to charity.
Incredibly, Buffett has created many millionaires — and even billionaires — in his home town, where he still lives today. What a legend.
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Warren Buffett changed my life
I’ve been investing since 1986 (37 years). Alas, my early years were littered with howlers, because I was prone to speculating or outright gambling, rather than properly investing.
Eventually this improved, notably after I read several books about Warren Buffett. I particularly enjoyed The Essays of Warren Buffett: Lessons for Investors and Managers by Lawrence A. Cunningham (1997) and The Snowball: Warren Buffett and the Business of Life by Alice Schroeder (2009).
What ‘Uncle Warren’ taught me
Buffett’s wisdom — often delivered in a folksy, homespun way — have inspired millions to manage their finances better. These four quotes from the great man helped me to become an intelligent investor.
1. On value investing
In a lecture at Indiana’s University of Notre Dame in 1991, Buffett summed up value investing as: “Just buy something for less than it’s worth”. Today, this is my primary goal as a money manager — when hunting for shares, my aim is to buy £1 coins for, say, 60p or less.
2. On buying for the long term
Praising the benefits of long-term investing, Warren Buffett once remarked, “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years”. Of all his excellent lessons, this is one of my favourites.
When thinking about buying any stock today, I ask myself: would I be happy owning this company for at least a decade? If not, then those shares get the boot.
3. On US equities
Warren Buffett repeatedly urges investors to back corporate America. Interviewed on Dateline NBC in January 2009, he explained, “It’s never paid to bet against America. We come through things, but it’s not always a smooth ride”.
This quote came just two months before the 2007-09 global financial crisis ended and a new bull market began. Years later, Buffett repeated this advice at a 2020 shareholder meeting, saying, “American magic has always prevailed, and it will do so again”.
In my early years as an investor, I almost exclusively owned UK stocks. Today, my family portfolio is probably 75%+ weighted towards top US stocks. Like Buffett, I believe in the economic power of American corporations.
4. On bear markets
Having survived the October 1987, 2000-03, and 2007-09 stock-market crashes, I grew afraid of market meltdowns. No longer. As Buffett wrote to shareholders in 2016, “Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold”.
Happily, when Covid-19 trashed markets in March 2020, my wife and I had 50% of our wealth in cash. Within days, it was invested in US and global stocks. This one decision changed our lives immensely, so thanks for all the lessons, Warren Buffett!
