Money Rehab with Nicole Lapin
Money Rehab with Nicole Lapin

7 Investing Lessons from Warren Buffett

1d ago9:411,897 words
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Warren Buffett just stepped down as CEO of Berkshire Hathaway and the investing world is holding its breath. Today, Nicole breaks down the frameworks that turned a $1,000 investment in 1965 into over...

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investors of all time, maybe the most iconic. His investing strategy has turned Berkshire Hathel way into one of the most successful companies in history and made Buffett one of the wealthiest people on the planet. Since taking control of Berkshire Hathel way in 1965, Buffett has delivered an average annual return of around 20%. Nearly doubling the S&P 500's average over that same stretch. A $1000 investment

in Berkshire in 1965 would be worth over $30 million today. Because Buffett is such a famed investor,

he moves markets. When he invests in something, other investors definitely take note. So, how do we answer the question? What would Warren do when we can no longer look to Berkshire for clues? Well, we can copy his investing frameworks, which will lucky for us, are very simple,

They're not easy.

to it. But spotting great businesses isn't so easy or else everyone would be beating the S&P 500.

So, I'm going to unpack some famous examples of Warren Buffett's investment decisions and then

I'll decode the big lessons that we can all take away from those stories. And I know what you might be thinking. We might not have to look away from Berkshire to actually know what Buffett would do. Able might have studied under Buffett long enough to replicate his money move. Well, I will say more on that at the very end. But first, some Buffett lore. One of Warren Buffett's most famous and enduring investments is Coca-Cola, which Berkshire began buying

in 1988 after the 1987 market crash and would end up putting in around $1.3 billion.

Buffett picked Coke because he saw a company with an unshakable brand, massive distribution network and global pricing power. He also noted the psychological loyalty that people have to their beverage of choice and Coke's ability to raise prices without losing customers.

Today, Berkshire owns more than 6% of the company and that $1.3 billion investment is now worth

over $28 billion and the dividends alone now exceed $700 million per year. Another classic example of Warren Buffett's strategy is his investment in McDonald's stock during the 2008 financial crisis. With this investment, he took advantage of a temporary undervaluation in a company he deeply admired. Though he didn't hold onto the shares for decades like he did with Coke, the McDonald's investment reflected classic Buffett behavior. When markets panic,

Buffett looks for opportunities in strong, steady businesses that will survive downturns. Now let's talk about a huge evolution in Buffett's strategy. Apple, for years, Warren Buffett avoided tech. He said he didn't understand it well enough to invest in it, but in 2016, Berkshire began buying Apple. A few years later, it became Berkshire's single biggest holding.

Buffett saw Apple not as a tech company but as a consumer products company with an unmatched ecosystem.

Its brand loyalty recurring revenue and pricing power made it look a lot like Coca-Cola, but with better margin. Berkshire invested about $31 billion into Apple. Today, it's worth over $160 billion. And while Buffett trimmed the position slightly in 2023,

he's still all in on the iPhone economy. But before we get too hyped up, Buffett hasn't always

hit home runs. Buffett called IBM a long-term investment back in 2011. It did not work out. Company failed to adapt quickly to the shift toward cloud computing and Buffett eventually sold his stake. He also missed out on Google and Amazon early on despite understanding their dominance later on. He said he didn't fully grasp their business models at that time. And that is part of the whole circle of competence discipline. He does not chase what he doesn't understand. Even if it means

missing out on some upside. But here's the Buffett twist. Even his misses teach us something valuable. You don't have to be right all the time. You just have to be right enough and let your winners compound over time. So zooming out beyond the big tickers here are seven big takeaways that

you can apply whether you have a hundred bucks or a hundred million bucks to invest.

First, invest in what you understand. Buffett famously stays away from businesses that he doesn't get, which is why for many years he avoided tech stocks. Second, look for durable competitive advantages. He calls them economic modes. Things like strong brand identity, pricing power or network effects that protect a company from competitors. Third, management matters. He invests in companies with competent, shareholder friendly leadership. Next, buy at a discount to intrinsic value.

Value investing is about identifying what a business is truly worth and only buying when that stock is priced below that. And be greedy when others are fearful. This is a classic classic Buffettism. Crashes create opportunities. So do panic. Also keep a long time horizon. Compounding works best when you leave it the heck alone. And maybe above all cash flow is king or as I like to say queen. Buffett wants businesses that are not just profitable on paper but that generate real consistent

growing cash flow. So will Buffett's successor Greg Abel be able to follow these seven tenants, Abel who previously ran Berkshire's non-insurance businesses, has long been seen as a steady Buffett approved operator with deep knowledge of the firm's culture and financial DNA. While Buffett is still involved as chairman, he's left Abel with both the reins and an incredible amount of dry powder to work with. As of the end of 2025, Berkshire was sitting on nearly $400

billion in cash and short-term investments, which gives Abel significant flexibility for future moves. One of his first, reassessing Berkshire's long-held stake in craft times. A position that Buffett

Once admitted he overpaid for in a 2015 merger deal that has an age 12.

prepping to scale down or fully exit that investment according to a recent SEC filing.

While this move isn't said in stone yet, it certainly signals a desire to clean up the portfolio,

a possible reflection of Abel's intent to be a more active and pragmatic steward of Berkshire's

holdings. Morningstar analysts called the move a sign of Abel's willingness to reset the deck

early in his tenure. If so, it marks a quiet but meaningful shift, away from holding through thick

and thin and toward a more strategic, flexible approach, while still honoring the foundational values that Buffett bill. For today's tip, you can take straight to the bank. While today,

I've been talking a lot about picking individual stocks, Warren Buffett has a directive in his own

well that he left for his own wife to invest 90% of their money in S&P 500 index funds and 10% in short-term government bonds, which brings me to my very last Buffettism, a void unnecessary risk.

Buffett has said that his first rule of investing is, "Don't lose money." His second rule is,

"Don't forget rule number one."

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