Keys to Buffett's Success

In an interview with The Motley Fool web site, author Roger Lowenstein, who has written extensively about Warren Buffett, offers some interesting insights into why the “Oracle of Omaha” has been such a successful investor.

“The most underrated part of his success would be his independence of character, his ability to just not do what everyone else is doing, to stand apart from it … just not to be affected by it and not swing at pitches he is not sure about,” Lowenstein explained. “How many times have we heard he’s through? We heard that in the era and we heard it in the mortgage era again. Just bubble after bubble, he stands on the sidelines and lets other people take what seem to be easy gains until they come crashing down. It sounds easy in retrospect, but it just takes an awful lot of self-confidence.”

As for what individual investors can learn from Buffett, Lowenstein says two keys are sticking to what you know, and not chasing short-term performance. “If something is going up and other people are buying it, but you don’t understand it, let that go by and buy something you would be confident for holding for three, four, five years,” he says. “Don’t buy on the basis of it’s going to go up tomorrow or someone else is going to take it off your hands, but that if you were buying the whole business at that price, you would be happy owning and operating that business, having put that amount of capital on a per-share basis in.”

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