Warren Buffett

Buffett's approach is simple to describe and almost impossible to copy. He buys great businesses at fair prices and then just...

holds them. Forever.

He calls it "buy and hold" but that undersells it — he means hold until the sun burns out. He looks for companies with a real unfair advantage over competitors.

Something that protects them from being wiped out. He calls it a "moat" — like the water around a castle.

Think Coca-Cola. Everyone knows it.

Nobody can replicate it. He puts a LOT of money into a small number of bets — usually his top five holdings make up over 70% of everything.

Most fund managers would have a panic attack at that level of concentration. Buffett calls it being convicted.

His old mentor Graham taught him to hunt for cheap, beaten-down companies and flip them fast. Charlie Munger, his business partner for 45+ years, talked him out of that.

Munger said: just buy the best businesses you can find and never sell. Buffett admits that shift made him hundreds of billions of dollars.

Benjamin Graham

He treated stocks as ownership stakes in real businesses — not tickets in a lottery. Before Graham, most investment advice was a mix of tips, rumors, and gut feeling.

He brought math to it. His core concept was intrinsic value — a calculation of what a business is actually worth based on its current earnings, assets, and finances.

If the market price is significantly below that number, you buy. The gap between price and value is what he called the margin of safety: the most important concept he ever introduced.

The bigger the margin of safety, the less damage an error in your analysis can do.

He also invented the allegory of Mr. Market — an imaginary business partner who shows up every day offering to buy or sell your shares at whatever price his mood dictates.

When he's euphoric, prices are too high. When he's depressed, prices are too low.

Your job is to exploit his mood swings, not follow them. This was 1949.

It's still the clearest explanation of how to think about market volatility that anyone has ever written.

Warren Buffett

Rule No. 1: Never lose money.

Rule No. 2: Never forget Rule No.

1. Buy businesses, not stocks — the distinction matters more than most investors realize.

Let compounding do the heavy lifting and get out of its way. Never use debt to invest.

Be fearful when others are greedy, greedy when others are fearful. Time in the market destroys timing the market in every long enough data set.

For most people, a low-cost S&P 500 index fund will outperform almost any active strategy, including most professional money managers — including, he's said, what most of his estate will go into after he's gone.

Benjamin Graham

Three ideas define him. First: the margin of safety.

Always buy with a meaningful cushion between what you pay and what the thing is actually worth. If you're right, you do very well.

If you're wrong, you don't get wiped out. Second: Mr.

Market is your servant, not your master. The market's daily mood is irrelevant to whether your underlying analysis is correct.

Ignore the noise. Third: an investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return.

Everything else is speculation. He was blunt about this distinction.

Most of what people called investing in his era — and honestly in most eras — was speculation dressed up in confident language.

Warren Buffett

Buffett's whole thing is: do so much homework that the risk basically disappears. He doesn't diversify across 500 stocks to protect himself — he researches 10 companies so deeply that he's more confident about those 10 than most people are about anything.

He never borrows money to invest. Ever.

He keeps a mountain of cash at Berkshire — over $100 billion sitting around doing nothing — specifically so he can swoop in when everyone else is panicking and selling cheap. He once called derivatives "financial weapons of mass destruction" back in 2002.

Wall Street laughed. Then 2008 happened and Wall Street stopped laughing.

He doesn't predict where the stock market is going. He predicts whether a business will still be dominant in 20 years.

That's it.

Benjamin Graham

He was conservative to the point that contemporaries sometimes called it excessive caution. He wanted a margin of safety large enough to survive being significantly wrong in his own analysis.

He preferred businesses with consistent earnings histories, strong balance sheets, and low debt. He did not trust projections about future growth — he trusted current, auditable numbers.

If a company looked cheap based on what it had already proven it could earn, he was interested. If it required optimistic future projections to justify the price, he was not.

He believed overconfidence in predictions was the primary source of investment losses, full stop.

Warren Buffett

Despite a $120B net worth, Buffett still lives in the same gray stucco house in Omaha he bought in 1958 for $31,500. He drives himself to work.

Breakfast is McDonald's — he orders based on his mood: $2.61, $2.95, or $3.17. He plays bridge obsessively, often online with Bill Gates.

He drinks multiple Cokes a day (Berkshire owns a large stake in Coca-Cola; coincidence is left as an exercise to the reader). He has pledged to give away more than 99% of his wealth, primarily to the Bill & Melinda Gates Foundation and his children's foundations.

He takes a $100,000 annual salary from Berkshire. He does not own a smartphone.

Benjamin Graham

He was genuinely modest about money. He found the intellectual puzzle of valuation more interesting than the wealth it could produce.

He retired to California on a comfortable but not extravagant income. He taught at Columbia for nearly three decades for standard academic pay.

His students — particularly Warren Buffett — went on to make orders of magnitude more money than Graham himself did by applying his methods. He spent his later years writing, revising his ideas, and reportedly reading Latin and Greek for pleasure.

He was described by people who knew him as charming, witty, and multilingual.

Warren Buffett

Apple. Berkshire started buying Apple in 2016 — late by any tech investor's standard, from a man who spent decades insisting he didn't understand technology.

By 2023, the position had grown to over $170 billion, returning more than 800%. Buffett called it the best business he'd ever seen and admitted he should have bought it earlier.

Honorable mention: American Express in 1963 during the Great Salad Oil Scandal, when he put 40% of the Buffett Partnership into AmEx at distressed prices while the rest of Wall Street was running away.

Benjamin Graham

GEICO. In 1948, Graham-Newman invested $720,000 in GEICO when it was a small, obscure government employees insurance operation.

This was roughly half the fund's total assets — a concentration level Graham himself had written against. The position grew to be worth tens of millions before he died.

Beyond the financial return, the GEICO investment influenced Warren Buffett to study the company intensively, and Buffett eventually acquired all of GEICO for Berkshire Hathaway in 1996. One investment produced ripples across a century of finance.

Warren Buffett

Buying Berkshire Hathaway. He bought it in 1962 as a cigar butt — a cheap, dying textile company — and then kept it instead of winding it down into a clean insurance holding company.

The C-corp structure meant decades of tax drag. He has estimated this single mistake — triggered partly by spite after the owner tried to lowball him on a buyout — cost Berkshire and its shareholders roughly $200 billion over 50 years.

He also admits missing Google and Amazon, both of which he understood well enough to buy and simply didn't.

Benjamin Graham

The 1929 crash. He had spent years writing about valuation and the concept of cheap stocks.

He still got caught up in the late 1920s bull market excitement and didn't apply his own principles rigorously enough. He lost significant money.

He later described it with uncommon honesty — not blaming bad luck, not glossing over it, just saying he failed to follow his own rules. The crash was the crucible.

Security Analysis came out in 1934. The Intelligent Investor followed in 1949.

Both books came directly from working through what went wrong and why. The mistake produced the framework that generated more investment wealth than almost any other set of ideas in history.

Warren Buffett

Warren Buffett was born in Omaha, Nebraska in 1930. He bought his first stock at age 11 — three shares of a company called Cities Service.

He paid $114. He was eleven.

By 14, he owned a 40-acre farm and had filed his first tax return. He applied to Harvard Business School and got rejected.

Best thing that ever happened to him, honestly. He ended up at Columbia instead, where he met Benjamin Graham — the guy who basically invented the idea of buying undervalued stocks.

After graduating in 1951, Buffett started his own investment partnership in Omaha with $105,000 from family and friends. He turned that into something much bigger, compounding at around 30% per year for over a decade.

Then in 1969, he shut it down and quietly took over a dying Massachusetts textile company he had bought partly out of spite. That company was Berkshire Hathaway.

What happened next is the greatest investing run in history — and it started with a grudge.

Benjamin Graham

Benjamin Graham was born Benjamin Grossbaum in London in 1894. His family moved to New York when he was a year old.

His father died when Graham was nine. His family lost most of their savings in the 1907 financial panic.

He grew up with a serious understanding of what it actually meant to lose money.

He graduated from Columbia University in 1914 at age 20, second in his class. The university offered him teaching positions in three departments — English, philosophy, and mathematics.

He chose Wall Street instead. He started the Graham-Newman Corporation in 1926, which functioned as a hedge fund before anyone used that term.

He lost heavily in the 1929 crash — which he later admitted meant he hadn't been following his own principles rigorously enough. He spent the 1930s rebuilding, writing, and thinking.

He taught at Columbia Business School from 1928 to 1956. His greatest student was Warren Buffett, who took his class in 1950 and called it the most important educational experience of his life.

Graham retired to California in 1956 and spent his last years revising his investment philosophy and living simply. He died in Aix-en-Provence, France, in 1976.

Warren Buffett

His main vehicle is Berkshire Hathaway — a company he took over in 1965 when it was a dying textile mill. He basically gutted the textile business and turned the whole thing into a giant money machine that owns other businesses.

Today it's one of the most valuable companies on earth. On the stock side, his biggest bet is Apple — worth over $175 billion at its peak.

He also owns huge chunks of Bank of America, Coca-Cola (since 1988 — he really doesn't sell), American Express, and Chevron. Then there are the companies Berkshire owns outright.

GEICO, one of the biggest car insurers in America. Burlington Northern Santa Fe, a massive railroad.

Dairy Queen, See's Candies, Duracell. Basically a random collection of boring, cash-generating businesses that he loves precisely because they're boring.

His first fund — Buffett Partnership Ltd. — ran from 1956 to 1969.

He returned around 30% per year while the market did 8.6%. Then he shut it down, said he couldn't find enough cheap stocks, and walked away at the top.

Benjamin Graham

Graham-Newman Corporation, which he co-founded and ran from 1926 to 1956, delivered roughly 20% annual returns over that period — outstanding for any era, remarkable given it spanned the Great Depression. His single best investment was GEICO.

In 1948, the fund put approximately $720,000 into GEICO — about half the fund's total assets at the time. That was a violation of his own concentration rules, which tells you how strongly he felt about it.

When the fund dissolved in 1956, GEICO shares were distributed to investors. Graham held his personally.

By the 1970s they were worth millions. Warren Buffett later bought the entire company for Berkshire Hathaway.

The ripple effect of that one position is impossible to fully calculate.

Warren Buffett

University of Nebraska–Lincoln (B.S. in Business Administration, 1950).

Columbia Business School (M.S. in Economics, 1951) — the only school that mattered, where he studied under Benjamin Graham and got his only A+.

He also spent two years at the Wharton School before transferring. Harvard Business School rejected him.

He's described that rejection as one of the luckiest things that ever happened to him.

Benjamin Graham

Columbia University, class of 1914. Graduated at age 20, second in his class.

Offered teaching positions in English, philosophy, and mathematics — chose Wall Street. Taught at Columbia Business School from 1928 to 1956.

Also lectured at UCLA in retirement. His formal education ended at Columbia but his actual education never stopped.