Here's something that sounds like a riddle: What does Warren Buffett buy when he doesn't buy stocks? The answer reveals one of the most important lessons from the Oracle of Omaha's seven-decade investing career.
Legendary investor Warren Buffett officially stepped down as CEO of Berkshire Hathaway Inc. (BRK.B) on Wednesday, closing a remarkable chapter in financial history. While he remains chairman, the transition marks the end of an era that began with a precocious 11-year-old boy who knew exactly what he wanted to do with his money.
When an 11-Year-Old Spent His Life Savings
Buffett's first trade happened in 1942, and he remembers it with startling precision. Despite being 92 years old at the time of a 2022 interview with Charlie Rose, Buffett recalled spending exactly $114.75 on March 11, 1942, buying three shares of Cities Service preferred stock. It was every penny he had saved after researching American companies.
"I knew more when I was 11 than I know now," Buffett joked during the interview.
That early fascination with stocks could have sent Buffett down the path of typical stock picking. Instead, a book completely transformed his approach to investing.
The Book That Changed Everything
After reading "The Intelligent Investor" by Benjamin Graham, Buffett made a crucial mental shift. He stopped thinking about buying stocks and started thinking about buying companies. The distinction might seem subtle, but it's everything.
When you buy a stock, you're watching price movements and ticker symbols. When you buy a company, you're evaluating business fundamentals, competitive advantages, and long-term potential. Buffett adopted a 10-to-20-year outlook on his purchases, treating each investment as if he were acquiring the entire business.
Even more surprising: Buffett told Rose that he actually hopes stocks go down in the short term after he buys them. Why? So he can buy more at better prices. That's the mindset of someone who sees himself as a business owner, not a stock trader.
This philosophy—investing in companies rather than simply stocks—became one of Buffett's core principles and a key piece of wisdom he leaves behind as he transitions from the CEO role.
The Partnership That Never Had an Argument
Buffett reflected on having "the most interesting job in the world" as Berkshire's CEO. He emphasized that choosing what you do and who you work with matters enormously.
His partnership with the late Charlie Munger exemplified this perfectly. They met in May 1959, and according to Buffett, "We've never had an argument." While many find this impossible to believe, Buffett insists it's true. The duo supported each other's decisions whether they agreed initially or not.
Looking back on his career, Buffett acknowledged you can always second-guess past decisions, but he has no regrets. He praised being born in the United States and the extraordinary opportunities that came his way.
"It's given me everything," he said.
The Next Chapter for Berkshire
Berkshire Hathaway (BRK.B) now enters a new era without Buffett or Munger in active operating roles. Munger passed away in 2023, and with Buffett's transition from CEO, Greg Abel takes the reins. Abel faces the challenging task of continuing the Buffett-Munger legacy while implementing his own investment methods and philosophy.
As Buffett steps back from the spotlight, investors are left with his timeless wisdom: Don't just buy stocks. Buy companies. Think long-term. And when everyone else is selling in a panic, that might be exactly when you should be buying more.