At the University of Florida in 1998, Warren Buffett offered a line that’s still quoted by investors and business leaders alike:
“Time is the friend of the wonderful business, it's the enemy of the lousy business. If you're in a lousy business for a long time, you're going to get a lousy result, even if you buy it cheap. If you're in a wonderful business for a long time, even if you pay a little too much going in, you're going to get a wonderful result.”
More than a quarter-century later, the Oracle of Omaha’s message feels as relevant as ever. Amid recent market turbulence, his foundational philosophy — investing in quality over bargains — is proving its durability once again.
Then: Late ‘90s Speculation, Tech Mania, and Buffett’s Contrarian Wisdom
When Buffett shared that insight in 1998, the dot-com bubble was inflating fast. Investors were pouring capital into unproven internet companies with sky-high valuations. Meanwhile, Buffett was widely criticized for avoiding the biggest tech names, calling them speculative and lacking the enduring economics he looked for in a business.
Buffett’s statement was not only a philosophical north star — it was a direct counterpoint to the prevailing sentiment of the time. While others chased flashy IPOs, he doubled down on businesses like Coca-Cola (KO) and Gillette: durable brands with predictable earnings and strong moats.
By the early 2000s, the bubble burst, and Buffett’s long-game bet was vindicated.
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Now: 2025’s Market Faces a Similar Crossroads
Fast-forward to April 2024, and Buffett’s warning carries fresh urgency.
In the past few weeks, several companies riding the latest wave of experimental technology have seen their valuations collapse. Nvidia (NVDA) has collapsed over 30% since its earlier highs. But in that same period, Warren Buffett’s Berkshire Hathaway (BRK.B) (BRK.A) – now sitting on a $334 billion pile of cash – has only retreated a mere 3%.
The end of the zero-interest era has changed the game. With the cost of capital rising, “wonderful businesses” that can self-fund operations without burning through investor cash are thriving. Lousy businesses, by contrast, are running out of runway every day.
The quote from 1998 is a distillation of Buffett’s enduring philosophy:
- Look for economic moats: A great business has barriers that protect it from competition — like brand, network effects, or regulatory advantages.
- Time is a multiplier: Compounding only works when the underlying engine is healthy. Mediocre or broken business models decay over time.
- Valuation matters — but not obsessively: Overpaying modestly for a great company is better than buying a cheap lemon.
Buffett has often cited See’s Candies and American Express (AXP) as examples. He may have paid up front, but the long-term cash flows more than justified the initial investment. Buffett’s 1998 quote isn’t just great advice — it’s a universal principle. Whether you're running a company, managing a portfolio, or building a career, time will either compound your strengths or magnify your weaknesses. And in a world chasing speed, there’s wisdom in playing the long game.
On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
