What can investors learn from Warren Buffett?

Warren Buffett, the world’s most famous investor, recently announced his retirement as CEO of investment firm Berkshire Hathaway. But what lessons can investors learn from this “super investor”? We spoke with Maarten Lubbe, economist and strategist at APG, to find out.

“The Master Investor,” “The Oracle of Omaha”—Buffett has no shortage of nicknames. Has he perhaps been overhyped over the years?
“I’m not sure ‘overhyped’ is the right word, but Buffett has certainly become something of an idol among investors. He’s a charismatic figure who has a unique ability to explain complex matters in simple, relatable terms. Just recently, he spoke about Donald Trump’s import tariffs. In his usual reassuring tone, he said that over his sixty-year career, he’s seen countless politicians come and go—and America has always managed to recover. You may or may not agree with him, but what he says is almost always worth listening to.
He shares his insights at Berkshire Hathaway’s annual meeting, in front of tens of thousands of people, from a stage in a stadium in Omaha. Buffett has a stellar track record, though many of his best deals were made early in his career—in the 1960s, ’70s, and ’80s. He’s still made strong investments since then, though not necessarily far better than other successful investors. So calling him a hype would be unfair—he remains a brilliant investor and an exceptionally smart businessman.”

What makes Buffett such a great and influential investor?
“The genius of his investment strategy was always his focus on highly profitable companies, and then reinvesting those profits back into the business to drive further growth. Eventually, that creates a snowball effect, where profits grow exponentially. Early on, he cleverly bought a number of insurance companies, including GEICO, which primarily served U.S. government employees. That provided a steady stream of insurance premiums, which Buffett could then invest elsewhere. He had a keen eye for profitable businesses. That compounding effect—profit on profit on profit—accelerated tremendously in recent decades, turning Berkshire Hathaway—originally a textile company, now Buffett’s investment vehicle—into a firm with $347.7 billion in cash on hand.”

What other lessons can investors learn from him?
“One of his most important lessons is that markets will always fluctuate, and that as an investor, you need to stay calm through it all. You’ve chosen a strategy, you’ve built a portfolio you believe in, and then the key is not to get swept up in market noise. Many investors—even professionals—make the mistake of reacting to short-term market movements. Buffett doesn’t care about daily price swings; he looks at a company’s annual report, asking: What does this business do, and how can it grow over time? That long-term perspective is something we strongly relate to as a pension investor, but it’s equally valuable for individual investors.

Another key lesson is to only invest in things you understand. Take a soft drink company, for example—you know exactly where it makes its money, which makes it an attractive investment in Buffett’s eyes. With tech companies, the revenue model wasn’t immediately clear to him, so he initially missed out on companies like Google and Amazon. Later, he caught up with an investment in Apple—not because he fully grasped the technology, but because he realized he couldn’t live without his iPhone.”

Do investors actually follow his advice? After all, markets continue to swing wildly, especially with ongoing trade tensions. One of Buffett’s famous quotes is: “Be fearful when others are greedy, and greedy when others are fearful.”
“Many investors—both professional and individual—struggle to stay calm and keep faith during uncertain times. What sets Buffett apart is his unshakable belief in America and capitalism. One advantage he has is that he doesn’t face pressure from clients or shareholders demanding answers. In fact, he doesn’t have traditional clients or a benchmark, and Berkshire Hathaway shareholders practically revere him. For a portfolio manager whose clients are panicking or for retail investors watching their savings disappear, it’s much harder to stay calm. Still, I believe that most people should and want to adopt that kind of mindset.”

Buffett will be succeeded at Berkshire Hathaway by 62-year-old Canadian Greg Abel. Buffett himself will stay on as an advisor. What does this mean for the future of the company?
“I should approach this rationally, like Buffett would—but emotionally, I’d say: Buffett is Berkshire Hathaway. I have no doubt that Greg Abel will be an excellent CEO, but the icon that is Warren Buffett will absolutely be missed. Will 40,000 people still travel to that stadium in Omaha for the next shareholders meeting just to hear Abel speak? Buffett, with his endless anecdotes and warm storytelling, was truly a one-of-a-kind experience.”