Ten lessons that stand the test of time: The legacy of the Oracle of Omaha

Keytrade Bank

keytradebank.be

January 21, 2026

3 minutes to read

An investment of $100 in Berkshire Hathaway in 1964 would be worth more than $5.5 million today. However, there's no hidden strategy or complex algorithm behind this success – just a handful of principles that Warren Buffett applied consistently for decades. And they still work today.

Lesson 1: Recognising mistakes is more important than being perfect

Perhaps the most surprising characteristic of the legendary investor is his openness to admitting mistakes. In his annual letters to shareholders, Buffett used the words 'error' or 'mistake' no less than sixteen times between 2019 and 2023. Many large companies don't even dare to mention those words (source).

His biggest blunder, however, was the acquisition of Berkshire Hathaway itself. "The dumbest stock I ever bought was – drum roll here… – Berkshire Hathaway", he admitted in 2010. The textile company turned out to be a millstone. Buffett estimates that this mistake cost him and his investors at least $200 billion. If he had put that money straight into insurance instead of textiles, Berkshire would be worth twice as much as it is today (source).

But it was this mistake that taught him a crucial lesson – get out of poor companies, no matter how tempting the price may seem. Ironically, this honesty about failures made him a better investor. He learned from every mistake and adapted his strategy accordingly.

Lesson 2: Patience triumphs over genius

Buffett's IQ is likely around 150. By way of comparison, the average adult has an IQ of 100. Yet according to Buffett, you don't need to be a rocket scientist: "Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ" (source).

Their secret? Time. From 1964 to 2024, Berkshire achieved a compounded annual gain of 19.9%, compared to 10.4% for the S&P 500. That may seem a modest difference, but over sixty years, it results in a total return of more than 5.5 million percent for Berkshire, compared to 'only' 39,000% for the S&P 500 (source).

"Our favourite holding period is forever", Buffett has often said. This philosophy goes against everything that social media shows us today. Buffett shows that you don't have to be a smart trader, but a patient one. And that you're better off taking a moment to think rather than acting on impulse. Shares on the New York Stock Exchange are currently held for an average of ten months, whereas fifty years ago, the average stood at five years (source).

Lesson 3: Buy businesses, not pieces of paper

"Charlie and I are not stock-pickers; we are business-pickers", wrote Buffett in his letter in 2022. The difference is a crucial one. Whereas many investors track prices and carry out technical analyses, Buffett assesses companies as if he were looking to own them (source).

He asks himself a few simple questions: Do I understand what the company does? Does it have a strong market position? Can management handle money well? Do I trust the people at the helm?

This approach is still proving effective today. Simply look at his stake in Coca-Cola, which he has held since 1988, or American Express, which has been in his portfolio since the 1960s. "Only buy something you'd be perfectly happy to hold if the market shut down for ten years", is his advice (source).

Lesson 4: Never pay too much, even for quality

Buffett's biggest strategic shift came in the 1970s. His mentor Benjamin Graham taught him to buy cheap, undervalued companies – the 'cigar butts' that give you one last puff. But Charlie Munger convinced him: "It's far better to buy a wonderful company at a fair price, than a fair company at a wonderful price." (source)

That lesson also cost him money. In 2008, he entered ConocoPhillips just when the oil price peaked above $100 per barrel, and lost billions when the oil price crashed (source). The paradox here is that even a great company can prove a bad investment if you pay over the odds, while a reasonable company at a spot price can be a goldmine. The art lies in finding the balance.

Lesson 5: Invest in sectors you understand

Buffett missed out on some of the biggest investment opportunities in history. He avoided Google in the early days, and he also passed on Amazon when Jeff Bezos called in 1994. "I was too dumb to realise. I didn't think [Bezos] could succeed on the scale he has", he admitted (source).

Why? Because tech companies fell outside his domain of knowledge and experience. He avoided tech stocks for decades because he didn't understand the industry. You might think these were frustrating choices, yet it was precisely this discipline that made him successful.

"Risk comes from not knowing what you're doing", warns Buffett. By investing only in companies he understood – insurance, banks, consumer goods or utilities – he minimised costly mistakes (source).

It wasn't until Apple became a company with predictable revenues that he invested in 2016. Today, Apple still accounts for more than 20% of Berkshire's stock portfolio (source). Meanwhile, Alphabet (Google) and Amazon have since become part of its portfolio, too.

Lesson 6: Don't be led – or distracted – by the masses

"Be fearful when others are greedy, and greedy only when others are fearful" is perhaps Buffett's most famous saying.

During the 2008 financial crisis, Buffett injected billions in companies such as Goldman Sachs and General Electric, when everyone else was selling in panic. In 2022, when the S&P 500 fell by 18%, Berkshire rose by 4%. And not because Buffett had a crystal ball, but because he didn't let himself by guided by emotion (source).

"Look at market fluctuations as your friend rather than your enemy", he advises. Volatility creates opportunities for those who remain calm. The art lies in leaving your emotions at the door.

Lesson 7: Cash is oxygen

At the end of September 2025, Berkshire had $381 billion in cash resources – the largest cash position held by an American listed company (source). Critics complain that such funds are 'lazy' sitting on the side. But Buffett sees things differently.

"Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, but the only thing in mind when it is absent", he wrote (source). This buffer allows him to seize opportunities when others are forced to sell.

Incidentally, the cash reserve is not a sign of weakness, but one of discipline. Buffett refuses to invest for the sake of investing. "If we were forced to invest purely to reduce our cash position to fifty billion, that would be the dumbest thing in the world", he once said at a shareholders' meeting (source). The lesson is to always keep some money on the sidelines to take advantage of opportunities.

Lesson 8: Learn from other people's mistakes

"I really believe it's better to learn from other people's mistakes as much as possible", says Buffett (source). That mindset explains why he is such an avid reader, spending an estimated 80% of his day reading and thinking (source). He reads to understand how companies work, why they fail, and which patterns keep coming up.

This is a valuable lesson for investors. You don't have to make all the mistakes yourself. By reading about companies that failed, sectors that crashed and investors that lost out, you can learn where the pitfalls may lie.

Lesson 9: Simplicity trumps complexity

Buffett's investment strategy fits on one A4 piece of paper. Look for companies with a strong market position, buy them at a reasonable price and hold on to them. "There seems to be some perverse human characteristic that likes to make easy things difficult", he notes (source).

Whether it's complex products, strategies or algorithms, Buffett does the opposite. He recommends that most individual investors simply invest in ETFs. "By periodically investing in an index fund, for example, the know-nothing investor can actually outperform most investment professionals", he said back in 1993.

Lesson 10: Optimism is an investment strategy

Reading Buffett's letters reveals a deep confidence in progress. Even when Berkshire's price halved from its latest peak – something that happened three times when he ran the company – he continued to reiterate that panicking doesn't get you anywhere (source).

Behind that idea is a simple belief that economies recover. Companies adapt. People continue to innovate, build and improve. Those who bet on this outcome usually come out on the right side of history.

And that's no small matter, as investing is a marathon. Anyone who is paralysed by thoughts of a catastrophe exits the market sooner or later. Those who believe that tomorrow can be better than today stay put. And it's staying put – through recessions, crashes and bad news – that is often the difference between moderate and exceptional returns.

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