Just what can individual investors learn from Warren Buffett’s incredibly successful career? In a recent column, The Wall Street Journal’s Jason Zweig takes a look at that question.
Zweig says that Buffett’s career has involved “the pursuit of unchanging goals through ever-changing means.” His belief in certain principles has remained constant. Among those principles is the mindset passed down by his mentor, Benjamin Graham, which Zweig describes this way: “Stocks are ownership stakes in businesses, not pieces of paper or blips on an electronic ticker; their market prices often are driven by the mood swings of investors rather than by the value of the underlying businesses; and investing is worthwhile only when value exceeds price by an amount great enough to create a ‘margin of safety.'”
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Another constant throughout Buffett’s career: His thirst for knowledge and ability to discern what information is important, and what is not, writes Zweig.
While his broader principles have remained in place, Buffett has changed the way he’s employed them, Zweig writes. He details the shift Buffett made from investing in obscure, small, deep value plays to focusing on large, high-quality, not-quite-as-cheap stocks (and private market deals).
In the end, Zweig says many investors focus too much on the minutae of Buffett’s moves. “To learn from Mr. Buffett, concentrate your energies on figuring out what you stand for as an investor, who you are, what you know and what you don’t,” he says. “Be inflexible on those principles. Then change and learn and grow relentlessly as you put them into practice.”