Warren Buffett’s Boring, Brilliant Wisdom

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Warren Buffett is old. He can’t keep up with the times. He’s famously cheap, and wears dorky grandpa glasses and bad suits. Even his seemingly cool nickname, “The Oracle of Omaha,” sort of sounds like a hokey phrase coined in the Roaring ’20s, or perhaps in ancient Greece. But as he’s proved time and again—like last year, when net earnings of his company, Berkshire Hathaway, jumped 61%—trendiness has nothing to do with making money in the long run. And while most of Buffett’s advice is aimed at investors, his business wisdom has obvious implications if you’re simply hoping to save money, or if you’re looking to buy or sell just about anything.

The WSJ notes that if you’d invested $10,000 with Berkshire Hathaway in 1965, you’d have $80 million right now. Little help that does anyone without a time machine. Still, it’s never too late to follow Buffett’s lead. His advice may be boring and old-fashioned. There is no get-rich-quick formula. What there is is a solid, well-thought-out approach. Here, the WSJ excerpts some of what Buffett wrote in a recent letter to stockholders:

Buy when everyone else is selling. “We’ve put a lot of money to work during the chaos of the last two years. It’s been an ideal period for investors: A climate of fear is their best friend … Big opportunities come infrequently. When it’s raining gold, reach for a bucket, not a thimble.”

Don’t buy when everyone else is buying. “Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance,” Mr. Buffett wrote. The obvious corollary is to be patient. You can only buy when everyone else is selling if you have held your fire when everyone was buying.

Value, value, value. “In the end, what counts in investing is what you pay for a business-through the purchase of a small piece of it in the stock market-and what that business earns in the succeeding decade or two.”

Buffett is addressing stockholders. But the thrust of what he’s saying is applicable to everyone. That’s the way a lot of Buffett’s advice works. Sure, there are obvious takeaways for MBAs and other white-collar types. But every little consumer can take heed too. Once you understand that, you’ll realize that Buffett is the modern-day version of famously money-wise Benjamin Franklin—only a whole lot richer.

“When it’s raining gold, reach for a bucket, not a thimble.” Now that sounds incredibly Franklin-esque to me.

Take this Buffett quote:

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

He’s discussing the purchase of a company. You’re not going to buy a company. So why should you care? Because the message applies equally well if you’re considering the purchase of a house, or a car, or anything you hope to use for a long time.

Another famous Buffett quote:

“Value is what you get.”

In other words, value is not what someone else (or society at large) tells you it’s worth. It’s not a value strictly because it’s cheap. It’s a value because the benefit you get is well worth the asking price.

Here’s some more Buffett wisdom to take to heart, no matter what you do for a living, no matter what your ability or interest in investing, no matter how much money you make:

“Risk comes from not knowing what you’re doing.”
“Only when the tide goes out do you discover who’s been swimming naked.”
“If a business does well, the stock eventually goes up.”
“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
“A public-opinion poll is no substitute for thought.”
“Beware of geeks bearing formulas.”
“Chains of habit are too light to be felt until they are too heavy to be broken.”
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”

Read more:
It’s a Bird! It’s a Plane! It’s … a Cartoon Warren Buffett Teaching Kids About Personal Finance?