In a 1985 interview with financial journalist and author Adam Smith, Warren Buffett shared the principles behind his extraordinary investment success. Smith, who had met Buffett early in his career, admitted on camera that he regretted not investing. Buffett, never one to brag without data, responded calmly: “If you joined the partnership when we started in 1956 and reinvested the proceeds in Berkshire… I think you’d have a little over $15 million now from $10,000.”
A Simple Approach With Big Results
Buffett didn't rely on flashy tech or fast trades to become one of the most successful investors in history. Instead, he followed the principles of financial analyst and economist Benjamin Graham, who was also his teacher and mentor. “Everyone that I personally know that has really stuck with the Ben Graham principles over 20 years or more has done appreciably better than the market,” Buffett said.
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He preferred buying understandable, predictable businesses—the kind that didn't require guessing where technology or trends would go. “You name 10 high-tech companies to me and ask me where they’re going to be in 10 years or 10 months and I don’t have the faintest idea,” he admitted to Smith.
Instead, Buffett focused on companies with durable advantages. “What makes a business a good business is when… I want a Hershey bar, and they can’t sell me an unmarked bar. If they don’t have it, I’ll go across the street to buy it,” he explained to Smith. That kind of consumer loyalty is what he calls “the power of the franchise.”
Long-Term Thinking, Not Lottery Tickets
Buffett said the reason more people don't invest this way is simple: they don't want to wait. “People would much rather be promised that they’re going to win a lottery ticket next week than that they’re going to get rich slowly,” he said.
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He emphasized that successful investing is less about intelligence and more about temperament. “Being a sound investor just requires a certain control of your temperament and the ability to know what you know and know what you don’t know,” he said.
He Doesn't Watch The Ticker
Buffett doesn't care if the New York Stock Exchange shuts down for a couple of years. “We own parts of businesses when we own stocks, and the New York Stock Exchange being open has nothing to do with whether the Washington Post is getting more valuable over a five- or 10-year period,” he said.
He warned investors not to let market prices dictate how they feel about their investments. “If your stock goes down 10% and that upsets you, it obviously means that you think the market knows more about the company than you do. In that case, you’re the patsy,” he said.
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Culture And Character Over Credentials
At Berkshire Hathaway (NYSE:BRK, BRK.B)), Buffett looks for managers who love what they do and keep running their businesses even after they become wealthy. “We like managers who are in love with their business. We like them that feel like I do, I want to tap dance when I get to the office,” he told Smith.
He admitted that business school graduates haven't impressed him much. “We find it’s difficult to teach a new dog old tricks,” he joked.
Despite his billions, Buffett insisted he's not in it for the money. “Money is a byproduct of doing something I like to do extremely well,” he told Smith. What matters most is performance and purpose, not paychecks. Buffett said more than 99% of his fortune will go back to society. Until then, he's happy doing what he loves every day.
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