Warren Buffett’s nine decades in investing: 9 timeless lessons from his legendary career

The Oracle of Omaha: Warren Buffett is celebrating his 93rd birthday. By his own sense of humour, being a nonagenarian, the candles would have cost more than the cake! In his annual newsletter to shareholders published in 1994, he refers to the 100th birthday celebration of Mrs Rose Blumkin - the founder of one of Berkshire Hathaway’s portfolio of companies – Nebraska Furniture Mart. Mrs Blumkin celebrated her 100th year in 1993, and according to Buffett, given the number of candles required, that was likely the costlier item.

Warren Buffett at 93: Key learnings from his 82 years of investing  Warren Buffett at 93: Key learnings from his 82 years of investing  

Given Buffet made his first investment at age 11; he comes with an investment experience of 82 years that appears unparalleled. Here are nine words of wisdom from Buffett and some elucidation gathered from his investment career spanning as many decades and are still relevant as always.

1 “An investor needs to do very few things as long as he avoids big mistakes.”

This advice is very relevant in our age of information overload, and the urge to react to the plethora of data flows and, views and opinions can be strong. Many times, it can turn out to be counterproductive. One big mistake can outdo many right investing decisions.

2 “A fat wallet is the enemy of superior investment.”

Let your lack of or limited financial resources do not constrain your investing journey. The limitation can become a key to judicious and superior investment decision

3 “As they say in poker – if you have been in the game for 30 minutes and you don’t know who the patsy is, you’re the patsy.”

If you buy a stock without clearly understanding the business and valuations, then you can end up being the patsy

4 “We do know that the less the prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs.”

Patience is one of the greatest virtues in investing. Often, irrational markets can sustain for long and test the tolerance of value investors, but as Buffett says, one needs to stay prudent as long as markets reflect less prudence. A good investor will wait for the markets to blink first!

5 “In a finite world, high growth rates must self-destruct. If the base from which the growth is taking place is tiny, this law may not operate for a time. But when the base balloons, the party ends.”

If you are ever tempted to invest in a company where a story of growth is sold to investors (like the new age IPOs of 2021), disregarding other fundamental metrics, this quote should serve as a guide. Growth will taper after a few years, and overlooking other fundamental metrics like profitability and valuation will be costly when the party ends.

6 “In Wall Street all too often, what the wise do in the beginning, fools do in the end

”If you ever have the fomo or fear of missing out feeling, resist it. It is no fun joining the party in the end and footing the whole bill!

7 “It’s no sin to miss a great opportunity outside one’s area of competence.”

Elon Musk recently tried to taunt Warren Buffett by claiming the amazing opportunity Buffet had missed by not investing in Tesla when it was trading at well less than one per cent of its current value. However, it appears he is unaware of Buffett’s investment principles, as the above quote indicates. So, if you have missed an opportunity, don’t waste time on regret; markets keep offering new opportunities.

8 “Inactivity strikes us as intelligent behaviour.”

Stock markets reflect the views of millions of market participants playing out tick by tick. You can never time your investing decisions perfectly. So, if you are convinced about an investment after due research, some level of inactivity is required to let it play out.

9 “Speculation is most dangerous when it looks easiest.”

In an era of ‘‘finfluencers’ posting fake P&L on social media to mislead all and sundry into derivatives trading and give a false illusion that it is easy to make money by speculating, this quote serves as a profound piece of advice as well as a warning.

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