investment advice

Lessons in Letters: The Wisdom of Warren Buffett, Part 1

Downtown Omaha skylineWarren Buffett, the Oracle of Omaha, is a widely acclaimed investor and businessman. He is not perfect and he has been controversial at times. However, to our knowledge Buffett has made more money investing than any other human being on the planet. So he has that going for him, which is nice.

Almost 40 years’ worth of Buffett’s annual shareholder letters are available at www.berkshirehathaway.com. They provide a wealth of information on his views, methods, and insights. Some things from 1977 have gone away, like VHS tapes and KC & The Sunshine Band, but Warren Buffett’s letter for that year contains some timeless insights.

“Most of our large stock positions are going to be held for many years and the scorecard on our investment decisions will be provided by business results over that period, and not by prices on any given day.”

He goes on to write,

“We ordinarily make no attempt to buy equities for anticipated favorable stock price behavior in the short term. In fact, if their business experience continues to satisfy us, we welcome lower market prices of stocks we own as an opportunity to acquire even more of a good thing at a better price.”

Notice that his focus is on the business, not the stock. Buffett did not build his fortune by worrying about short term price swings. He considers his investments in terms of many years, not day to day prices. And he understands that the best way to build wealth for himself and his investors is to buy great companies at bargain prices. For Buffett, falling prices are a buying opportunity rather than a source of pain and anguish.

Buffett’s insight is remarkable in a market dominated by short-term trends—as are his results. There is a lot of wisdom in these words, and we will frequently return to Buffett’s letters as a source of guidance. In the meantime, like Buffett, we continue to seek the best bargains on the market and cultivate our investment “orchard” for long-term growth rather than trying to sell if for short-term reasons.


Investing involves risk including loss of principal. No strategy assures success or protects against loss.

About “The Coming Monetary Collapse”

Ruined headlines about economic collapse

Recently, a retired worker popped into the front door to ask, “Mark, have you heard about the Coming Monetary Collapse?”

This, of course, was news to me. It eventually became apparent that this “news” came from an advertisement on the Internet. We see these ads every so often on financial news sites. They seem to look like reputable-looking news articles but in the end they always try to sell you something, typically expensive subscription services that will supposedly help you sidestep the “inevitable” collapse.

If someone actually knew enough to forecast an impending financial downturn, they wouldn’t need to be selling you advice in order to get rich—they’d already know everything they needed to make themselves rich beyond their wildest dreams. And if the collapse was all that catastrophic, all of that money wouldn’t do them any good anyhow. If you were convinced a worldwide monetary collapse was coming, here’s what you should invest in: canned food, ammunition, and generators. You don’t need expensive books and online seminars to tell you that.

(Incidentally, clients have told us about friends of friends who were convinced of global collapse and tried that investment strategy years ago. Last we heard, they were trying to sell used generators to rebuild their retirement funds.)

These sales pitches are often dressed up as actual news articles, but they’re pure scare tactics. They want to sell you something, and instead of promoting their advice on its own merits (it has none), they are trying to play to your fears.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.