In 1985, Berkshire Hathaway CEO Warren Buffett, now a globally recognized investor, participated in his first national TV interview on the PBS show “Adam Smith’s Money World.” Despite being worth around $500 million at the time, far from his current net worth of $114 billion, Buffett shared investment advice that remains relevant nearly 40 years later.
Here are the key takeaways from Buffett’s inaugural TV interview:
- Number one rule: “The first rule of an investment is don’t lose. And the second rule of investment is don’t forget the first rule. And that’s all the rules there are. If you buy things for far below what they’re worth, and you buy a group of them, you basically don’t lose money.”
- Most important quality for an investment manager: “It’s the temperamental quality, not an intellectual quality. You don’t need tons of IQ in this business… You need a stable personality. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd because this is not a business where you take polls. It’s a business where you think.”
- What most investors get wrong: “They do not really think of themselves as owning a piece of a business… If you’re making a good investment in a security, it shouldn’t bother if they closed down the stock market for five years.”
- On checking stock prices: “All the ticker tells me is the price… I would rather value a stock or a business first, and not even know the price, so that I’m not influenced by the price in establishing my valuation and then look at the price later to see whether it’s way out of line with what my value is.”
- Omaha versus Wall Street: Buffett contrasted Nebraska with Wall Street, emphasizing the benefits of a quieter environment and a longer focus for profitable decisions.
- Not owning technology stocks: “I really haven’t [ever bought a technology company]. I haven’t understood any of them. Never owned IBM.”
- Missing market trends: “I don’t have to make money in every game… There are all kinds of things I don’t know about, and that may be too bad. But you know, why should I know all about it? I haven’t worked that hard on it.”
- Waiting for the right pitch: “There are no called strikes in the business… You don’t have to swing at any of them. They may be wonderful pitches to swing at, but if you don’t know enough, you don’t have to swing.”
- Market timing: “If I were being asked to participate in a business opportunity, would it make any difference to me whether I bought it on a Tuesday or a Saturday or an election year or something? It’s not what a businessman thinks about in buying businesses. So why think about it when buying stocks? Because stocks are just pieces of businesses.”
