- Berkshire Hathaway CEO Warren Buffett sat down for his first national TV interview in 1985.
- Appearing on the PBS show "Adam Smith's Money World," he offered sage investment advice that he continues to preach today.
Berkshire Hathaway CEO Warren Buffett is a household name today, as the businessman has consistently been ranked as one of the best investors ever and, subsequently, one of the wealthiest people in the world.
Through his ownership stake in Berkshire Hathaway, Buffett currently has a net worth of about $114 billion. But in 1985, it was closer to $500 million and his name recognition was a lot lower.
That year Buffett sat down with host George Goodman of the PBS show "Adam Smith's Money World," in what is thought to be Buffett's first-ever national TV interview.
What's striking is how consistent Buffett's views towards investing have been nearly 40 years later. These are the best pieces of investment wisdom he shared.
1. 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."
2. Most important quality for investment manager
"It's the temperamental quality, not an intellectual quality. You don't need tons of IQ in this business. I mean, you have to have enough IQ to get from here to downtown Omaha, but you do not have to be able to play three-dimensional chess or be in the top leagues in terms of bridge playing or something of the sort. 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."
3. What most investors get wrong
"They do not really think of themselves as owning a piece of a business. The real test of whether you're investing from a value standpoint or not is whether you care whether the stock market is open tomorrow. If you're making a good investment in a security, it shouldn't bother if they closed down the stock market for five years."
4. On checking stock prices
"All the ticker tells me is the price. And I can look at the price occasionally to see whether the price is outlandishly cheap or outlandishly high but prices don't tell me anything about a business. Business figures themselves tell me something about a business, but the price of a stock doesn't tell me anything about a business. 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."
5. Omaha versus Wall Street
Nebraska: "Well, believe it or not, we get mail here and we get periodicals and we get all the facts needed to make decisions. And unlike Wall Street, you'll notice we don't have 50 people coming up and whispering in our ear that we should be doing this or that this afternoon."
New York: "If I were on Wall Street I'd probably be a lot poorer. You get overstimulated on Wall Street. And you hear lots of things, and you may shorten your focus and a short focus is not conducive to long profits."
6. Not owning technology stocks
"I really haven't [ever bought a technology company]. I haven't understood any of them. Never owned IBM. Marvelous company, I mean a sensational company, but I haven't owned IBM."
7. Missing market trends
"I don't have to make money in every game. I mean, I don't know what cocoa beans are gonna do. 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."
8. Waiting for the right pitch
"There are no called strikes in the business. The pitcher just stands there and throws balls at you... 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. And you can sit there and watch thousands of pitches and finally get one right there where you wanted something that you understand, and then you swing."
9. 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."