After decades at the helm of Berkshire Hathaway Inc. (BRK.A)(BRK.B), legendary investor Warren Buffett is heading for the exit at the end of 2025. It's the end of an era for the conglomerate he helped transform into one of the world's most successful investment vehicles.
While Buffett won't be sharing his wisdom with shareholders quite as publicly anymore, his investing principles aren't going anywhere. In fact, they're worth revisiting now more than ever. Here are three straightforward rules that Buffett has followed throughout his career that any investor can apply.
Rule #1: Patience Pays Off Better Than Quick Flips
At the core of Buffett's strategy is the buy-and-hold philosophy. He's not interested in trading stocks like baseball cards.
The lesson started early. At age 11, Buffett bought his first stock for $38 per share. When it hit $40, he took his profit and walked away feeling pretty smart. Then he watched the stock climb past $200. That stung, and it taught him something crucial about patience that would shape his entire career.
"If you aren't thinking about owning a stock for 10 years, don't even think about owning it for 10 minutes," Buffett once said.
Consider Coca-Cola (KO), one of Berkshire's largest holdings. Buffett bought those shares back in 1988 and never looked back. His preferred holding period? "Forever," he's said. That's not hyperbole. It's strategy.
Rule #2: Invest In What You Actually Understand
Buffett didn't just invest in Coca-Cola because the numbers looked good. He invested because he drank the stuff and understood why millions of other people did too.
His curiosity about companies he could understand drove some of his best research. When Buffett studied under renowned investor Benjamin Graham, he wanted to learn everything about GEICO, the insurance company Graham chaired. So what did young Buffett do? He took a train to GEICO headquarters on a Saturday, got let in by a janitor, and spent hours grilling Lorimer Davison, the only executive working that day. Davison, who later became CEO, answered every question Buffett threw at him. That knowledge eventually led to one of Buffett's most profitable investments.
The point isn't that you need to show up at corporate offices unannounced. It's that you should know what you're buying and why it works.
Rule #3: Find Strong Businesses at Sensible Prices
Buffett hunts for companies with predictable earnings, business models that make sense, and what he calls an "economic moat," a competitive advantage that protects them from rivals. "Never invest in a business you cannot understand," he's advised.
Take Apple Inc. (AAPL). For years, Buffett avoided technology stocks because he didn't feel he understood them well enough. But in 2016, he changed his tune. He saw Apple as having the best business in the world, with a moat as wide as they come, and the valuation finally made sense. Today, Apple is the largest holding in the Berkshire Hathaway portfolio.
That said, Buffett's "forever" holding period has limits. He'll sell when valuations stop making sense or when his thesis changes. He famously bought airline stocks after avoiding the industry for decades, only to dump them all in early 2020 when the pandemic hit. He believed recovery would take years and that there'd be too many planes chasing too few passengers. Even the Oracle of Omaha adjusts when the facts change.
As Buffett steps back from his daily duties at Berkshire, these principles remain as relevant as ever. They're not complicated, but they're not easy either. They require discipline, patience, and the willingness to actually understand what you own. That's the Buffett way.