The Wisdom of Warren Buffet

After the Berkshire Hathaway shareholders' meeting last weekend, CNBC interviewed Warren Buffet, Charlie Munger and Bill Gates this past Monday. 

Here are some valuable takeaways.

On buy-and-hold, low-cost, index investing:

…this time I went back to 1942 when I bought my first stock as an illustration of all the things that have happened since 1942. We have had 14 presidents. 7 Republicans. 7 Democrats. We have had world wars, 9/11, Cuban Missile Crisis. We have had all kinds of things. The best single thing you could have done on March 11th, 1942 is buy an index fund and never look at a headline... If you put $10,000 in an index fund that reinvested dividends… It would come to $51 million now.
— Warren Buffet

On "investing" in Bitcoin vs. stocks:

“When we buy a business [buy stocks or stock index funds]…we are buying something that at the end of the period we not only have what we bought in the first place but we have something that the asset produced. When you buy non-productive assets [like Bitcoin] — all you’re counting on is whether the next person is going to pay you more because they’re even more excited about it. But the asset itself is creating nothing. 
— Warren Buffet

Rick's note: This can be applied to any commodity - oil, natural gas, gold, silver, pork bellies…or GASP!…your house.   Don't "invest" in something that's only potential return is the next guy paying more for it.  Invest in things that produce - like companies in the form of stocks or stock index funds.

More on Bitcoin: 

And—it’s better if they don’t understand it. That’s the other thing about non-product— if you don’t understand it you get much more excited than if you understand it.
— Warren Buffet

Rick's note:  That thing you heard about that's too good to be true?  Educate yourself and truly understand it before you buy into it. 

On the company you keep: 

It’s very important in life to associate with people that are better than you are. It’s the most important decision — you will go in the direction of the people that you associate with.
— Warren Buffet

Rick's note: Amen.

 

Lastly, some reading recommendations from Warren and Bill:

Warren Buffet recommended: The Intelligent Investor by Benjamin Graham
Bill Gates recommended: Factfullness by Hans Rosling
Both recommended: Enlightenment Now by Steven Pinker