From selling gum for profit as a child to transforming the textile manufacturing company Berkshire Hathaway into a giant conglomerate and one of the largest components of the S&P 500, Warren Buffett has shared countless pieces of investing advice over the years.
Buffett is widely considered the greatest investor of all time, so when he talks, it’s typically a good idea for us fellow investors to listen. He’s not called “The Oracle of Omaha” for nothing.
Buffett announced his departure as Berkshire Hathaway’s CEO at year’s end during the company’s 2025 shareholder meeting. So, in honor of his seemingly endless flow of investing wisdom — Buffett is staying on as Chairman, so he hasn’t retired fully yet — here are 9 essential investing lessons from 60 years of Berkshire Hathaway annual shareholder letters.
Invest only in companies you can thoroughly evaluate. And have some humility — acknowledge what you don’t know, and don’t invest in a business you don’t understand. Buffett sold Coca-Cola door-to-door as a child, invested in Coca-Cola stock in 1988 and collected $776 million in dividends in 2024.(1)
You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.
Purchase high-quality companies at reasonable valuations. Don’t buy a mediocre business just because it’s cheap. Berkshire Hathaway purchased See’s Candies in 1972 for $25 million and recorded pre-tax earnings of $1.65 billion from the company through 2011.(2) He’s called See’s “the prototype of a dream business.”(3)
It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
Avoid frequent trading and hold investments for the long term to benefit from business growth. Over time, solid companies increase their earnings, expand and innovate.
In fact, when we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.
Invest based on a company’s intrinsic value, not market price. Markets can be irrational.
We define intrinsic value as the discounted value of the cash that can be taken out of a business during its remaining life. Anyone calculating intrinsic value necessarily comes up with a highly subjective figure that will change both as estimates of future cash flows are revised and as interest rates move. Despite its fuzziness, however, intrinsic value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Buy when markets are pessimistic to secure undervalued assets. Stay rational when others are losing their heads. In 2008, during the global financial crisis, Buffett invested $5 billion in Goldman Sachs preferred stock. Goldman Sachs redeemed the shares in 2011, earning Berkshire Hathaway a $3.7 billion profit.(4)
What we do know, however, is that occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
Make investing decisions based on analysis, common sense and sound judgment, not emotional reactions. Avoid getting swept up in fear and greed.
In my opinion, investment success will not be produced by arcane formulae, computer programs or signals flashed by the price behavior of stocks and markets. Rather, an investor will succeed by coupling good business judgment with an ability to insulate their thoughts and behavior from the super-contagious emotions that swirl about the marketplace.
Focus on a company’s fundamentals and long-term prospects — the business you’re investing in — not short-term market predictions or media hype.
Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important. (When I hear TV commentators glibly opine on what the market will do next, I am reminded of Mickey Mantle’s scathing comment: “You don’t know how easy this game is until you get into that broadcasting booth.”)
Think of stock investing as becoming a part-owner of a company. Who do you want by your side? Invest in businesses run by honest and competent managers.
We select our marketable equity securities in much the same way we would evaluate a business for acquisition in its entirety. We want the business to be (1) one that we can understand, (2) with favorable long-term prospects, (3) operated by honest and competent people and (4) available at a very attractive price.
Wait patiently for investment opportunities that meet your criteria, avoiding unnecessary action. Likewise, give your investment time to grow, and trust the long-term potential of strong businesses.
Patience can be learned. Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage.” — a Charlie Munger thought.
Warren Buffett’s decades of shareholder letters boil down to this: invest in what you understand, stay disciplined and patiently play the long game. From picking businesses with strong fundamentals to staying patient for the right opportunity, Buffett’s lessons are timeless and a tried and trusted roadmap to smarter investing.
Ready to put Buffett’s lessons to work? Check out Finder’s guide to investing to find the best brokers and tools to start building your portfolio.
