10 Investing Lessons from Warren Buffett

With Warren Buffett announcing he will step down as CEO at Berkshire Hathaway, now’s the perfect time to consider what has made him so successful. Buffett took control of Berkshire Hathaway in 1965 with the stock trading below $20. By the time he announced his retirement, Berkshire Class A shares closed at a record $809,809, and Buffett achieved a 19.9% compounded annual growth rate for his investors. What made him so great? Here we’ve broken down some investing principles learnt from the great man.

1. Invest in What You Understand

Example: Coca-Cola
Buffett is well known for enjoying a Coca-Cola – five a day I hear - and started buying its stock in 1988. He understood the business: a globally recognized brand with a simple, scalable product. He famously said, “If you gave me $100 billion and said, ‘Take away Coca-Cola’s market share,’ I’d give it back to you.” KO makes up about 10% of Berkshire’s holdings.

2. Focus on Intrinsic Value

Example: Apple
Though initially slow to embrace tech, Buffett saw Apple as a consumer products company with sticky customer loyalty. He assessed its true worth based on customer behavior and cash flow—not hype—and began buying in 2016, well before its stock price soared. Apple is about a fifth of Berkshire’s holdings today. It’s an example of Buffett’s mantra to buy businesses, not stocks.

3. Buy Wonderful Companies at Fair Prices

Example: See’s Candies
Bought in 1972 for $25 million, See’s had pricing power and a loyal customer base. Buffett used it as a cash-generating machine. It wasn’t dirt cheap, but it was a high-quality business—what he calls a “wonderful company.”

4. Long-Term Orientation

Example: American Express
Buffett invested in American Express in the 1960s during a scandal-related downturn. He held on for decades because he believed in its brand strength and long-term growth. “If you aren’t willing to hold a stock for 10 years, don’t even think about holding it for 10 minutes.” It remains in Berkshire Hathaway’s portfolio and one of the company’s largest holdings.

As a side point – the value of compounding cannot be overstated. Buffet makes the point of the Mona Lisa – if France’s King Francis had invested the roughly $20,000 he paid for the painting it would have turned into $1 quadrillion by 1963.

5. Quality Management

 Example: GEICO
Buffett admired GEICO’s leadership and business model for decades. He eventually acquired it fully in 1996. He often highlighted how well-managed the company was and how aligned it was with shareholder interests. But...Buffett also believes in investing in the business not the CEO and says “you should invest in a business that even a fool can run, because someday a fool will.”

6. Financial Strength and Predictability

Example: Moody’s
Buffett invested in Moody’s because it had high returns on capital, recurring revenue, and strong competitive positioning in credit ratings—a predictable, cash-rich business.

7. Be Fearful When Others Are Greedy (and Vice Versa)

Example: Goldman Sachs (2008)
During the financial crisis, Buffett invested $5 billion in Goldman Sachs via preferred shares with a 10% dividend. While others panicked, he structured a deal with strong downside protection.

8. Margin of Safety

Example: Washington Post (1973)
Buffett bought into the Post when it was trading for $80 million despite assets valued at over $400 million. The discount provided a strong margin of safety, and the investment multiplied in value over time.

9. Patience and Discipline

Example: Cash Reserves
Buffett often holds tens of billions in cash, waiting for the right opportunity rather than chasing speculative bets. He’s famous for saying, “The stock market is designed to transfer money from the active to the patient.” Berkshire today owns about 5% of all US Treasuries and its cash pile stands at $347bn. Cash isn’t king – you can’t compound at almost 20% annually on cash, but Buffett’s not afraid of it either.

10. Avoid Market Timing

Example: Broad Market Approach
Buffett doesn't jump in and out of the market. Instead, he gradually buys quality stocks and holds them, ignoring short-term volatility. “The best time to sell a great company is never,” he says. Time in the market is better than timing the market.

Explore Saxo’s Warren Buffett theme basket to invest in companies that reflect his timeless principles of quality, value, and long-term growth.