Look back at 60 years of Warren Buffett’s best investment advice
This Saturday (2/5), Berkshire Hathaway shareholders will descend on Omaha, Nebraska (USA), for the company’s annual meeting, as they have done for more than 60 years. But, for the first time, they will do so without Warren Buffett serving as the company’s CEO.
Although Buffett, 95, will still be present this year, he is not expected to speak, according to the event’s schedule. And, even with a less direct role, Buffett remains the chairman of Berkshire’s board of directors and remains the company’s largest shareholder, with around 30% of voting power and 13.7% of economic participation.
Also read: Warren Buffett: the only asset that never depreciates
Every year between 1965 and 2024, Buffett wrote a letter to shareholders before the annual “Woodstock for Capitalists.” Here are some of the best reflections of the “Oracle of Omaha” in his letters:
The best period to maintain an investment? Forever
Coca-Cola and Apple are among Berkshire’s most successful investments, but when Buffett started buying Coca-Cola shares in the 1980s, the choice wasn’t so obvious.
“We have made large purchases of preferred shares in Federal Home Loan Mortgage (‘Freddie Mac’) and Coca-Cola. We expect to hold these securities for a long time. In fact, when we own shares in exceptional companies with exceptional management, our preference period for holding them is forever,” Buffett wrote in his 1989 letter.
Over the next few years, Berkshire bought 400 million shares of Coca-Cola, spending about $1.3 billion in total. Today, the company owns 9.3% of Coca-Cola, a stake valued at more than US$31 billion.
Don’t be a duck
In 1998, Buffett warned against exaggerating one’s impact.
“In a bull market, one must avoid the mistake of the vain duck who quacks proudly after a downpour, thinking that his ability to row has brought him up in the world. A sensible duck would compare his position after the storm with that of the other ducks on the pond,” he wrote.
“So what was our duck rating in 1997? Although we paddled hard last year, passive ducks who simply invested in the S&P index rose almost as fast as we did.”
Where we went wrong in 2008
In 2009, after the financial crisis, Buffett pointed out where he believed Wall Street had gotten it wrong.
“When the financial history of this decade is written, it will certainly mention the internet bubble of the late 1990s and the housing bubble of the early 2000s. But the US Treasury bond bubble of late 2008 can be considered almost as extraordinary,” he said.
He added that investors “clinging” to highly liquid assets and long-term government bonds, who felt validated by commentators saying “cash is king”, were in for a rude awakening.
“Approval, however, is not the goal of investing. In fact, approval is often counterproductive, because it numbs the brain and makes it less receptive to new facts or a reevaluation of previous conclusions. Be wary of investment activities that generate applause; big moves are often met with yawns,” he wrote.
Betting in the USA
In one of his last letters, Buffett explained how being a U.S.-based company contributed to Berkshire’s success.
“At Berkshire, we expect and intend to pay many more taxes over the next decade. We owe it to the country: America’s dynamism has made an enormous contribution to whatever success Berkshire has achieved — a contribution we will always need. We count on the American tailwind, and although it has weakened from time to time, its driving force has always returned,” Buffett wrote in 2023.
“I have been investing for 80 years—more than a third of our country’s existence. Despite our citizens’ tendency—almost enthusiasm—for self-criticism and self-doubt, I have never seen a time when it made sense to bet against America in the long run. And I highly doubt that any reader of this letter will have a different experience in the future.”
Market is looking like a casino
In 2024, Buffett offered prescient reflections on disorderly market behavior, long before prediction markets began influencing Wall Street.
“Although the stock market is much larger than it was in our early years, today’s active participants are neither more emotionally stable nor better educated than when I was in school. For whatever reason, the markets now exhibit much more casino-like behavior than they did when I was young. The casino is now in many homes and tempts its occupants daily.”
“A fact of financial life must never be forgotten. Wall Street — figuratively speaking — would like its clients to make money, but what really makes its members’ eyes shine is frenzied activity. At such moments, whatever nonsense can be sold will be sold with vigor — not by everyone, but always by someone.”
Learning from the master
Buffett’s successor, Greg Abel, continued the annual tradition and wrote his first letter to shareholders in February. He began by praising Buffett.
“Warren Buffett is, without a doubt, the greatest investor of all time, with generations benefiting from his investment prowess,” wrote Abel.
“He has also been a remarkable CEO, executing his vision of building a large insurance business since acquiring National Indemnity in 1967 and using the insurer’s premium reserves to make successful investments in several important sectors of the economy, with a concentration in the U.S. (Much to Warren’s frustration, this letter begins with these observations — but we all know them to be true.)”
