Value Investing, Videos

Warren Buffett’s Top 10 Stock Market Investing Rules – 1985 Interview

Warren Buffett shares his top 10 stock market investing rules in this rare 1985 interview. Berkshire Hathaway His top 10 investing rules helped Warren Buffett make Berkshire Hathaway the most successful investing partnership in the world and Warren Buffett on of the richest and wealthiest in the world. All you need to know about investing in stocks.

Warren Buffett Stock Market Investing Rules

Warren Buffett’s Top 10 Stock Market Investing Rules – 1985 Interview

Get The Full Warren Buffett Series in PDF

Get the entire 10-part series on Warren Buffett in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q3 hedge fund letters, conference, scoops etc

Transcript

Others with a more secular approach who have also been very successful. Let's take Warren Buffett. Omaha Nebraska if you would put ten thousand dollars in 1965 into his company Berkshire Hathaway you would have one million today. One was a chapter in my 1972 book super money.

So I've known him a long time. He learned his trade with Ben Graham the original dean of security analysis at Columbia University. I know the world has ever been on television until this interview. And he has certainly never courted publicity. But recently he got a lot of it. When he emerged as the key figure in the takeover of ABC Capital City Warren will be the largest shareholder of the new company and his own net worth is now far in excess of 500 million dollars. But when I spoke with him last fall in his office in Omaha he very characteristically made his investment style seem so perfectly simple.

First of all an investment is don't lose. And the second investment is don't forget the first rule and that's all the rules there are.

I mean that if you buy things for far below what they're worth and you buy a group of them you basically don't lose money.

And what do you consider the most important quality for an investment manager.

It's a 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 what 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 that 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 and Ben Graham would say that you're not right or wrong because a thousand people agree with you and you're not right or wrong because a thousand people disagree with you you're right because your facts and your reasoning are right. What do you do.

That's different than 90 percent of the money managers who are in the market.

Certainly most of the professional investors focus on what the stock is likely to do in the next year or two.

They all kinds of all kinds of arcane methods of approaching that.

But 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 you if they closed down the stock market for five years. All the ticker tells me as the price and I can look at the price occasionally to see whether the prices are outlandishly cheap or outlandishly high but what prices don't tell me anything about a business 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 and establishing my valuation and then look at the price later to see whether it's way out of line with what my value is.

So Buffett chose to stay in this world. Omaha Nebraska where corn grows just minutes from downtown Omaha is a nice town but nobody claims it's a world financial center to cheer. The only Thundering Herd is actually on four feet. Lots of fun.

Omaha a little bit off the beaten track for the investment world.

Well believe it or not we get mail here it gets Herriott it goes. We get all the facts needed to make decisions and unlike Wall Street not as we don't have 50 people coming up and whispering in our ear that we should be doing this or that this afternoon here appreciates the lack of stimuli here. I like the lack of stimulation we get facts not stimulation here.

How can you stay away from Wall Street. Well that if I were on Wall Street I'd probably be a lot for a overstimulated in Wall Street and you hear lots of things. And you may. You may shorten your focus in a short.