In this month’s edition of “Money Matters,” Scott talks about the biggest financial lessons he has learned throughout the years from Warren Buffett.

Money Matters: Financial Lessons Learned from Warren Buffet Transcript

0:00:00.2 CJ : WTIP is pleased to bring you another edition of Money Matters, a monthly feature intended to help us understand more about managing our finances. Scott Oeth is a certified financial planner and Adjunct Professor. He works with many individuals and has taught retirement planning and wealth management strategies to hundreds of financial professionals, and Scott is joining us now by phone. Good morning, Scott.

0:00:25.6 Scott Oeth: Good morning. CJ.

0:00:26.6 CJ : Nice to have you with us again. And I'm really anxious to talk about this topic that you suggested, and that is that you want to talk about lessons learned from Warren Buffett. Now, Warren Buffett's like 94-years-old, and I read somewhere, Scott, that he delivered more than five million percent return to investors. Where are you going to start telling us lessons learned from Warren Buffett?

0:00:57.0 Scott Oeth: There's so much we could talk about, and I've really admired Buffett and learned so much from him, but I tried to narrow down to a couple of key things I think might be of interest to listeners and potentially actionable or take away. So, this past weekend at the annual meeting for Berkshire Hathaway, the company Warren Buffett has run and invested in through many decades, he announced that he's going to step aside and largely retire at the end of the year. This caught many people by surprise because as you mentioned, he's only 94-years-old.

0:01:25.8 CJ : I know. What's he thinking?

0:01:28.0 Scott Oeth: Yeah, I know, I know, but he has worked hard. He's been very transparent about it, very upfront about building a succession plan of well-qualified and trained investment managers. Well, there's a lot to be learned. I don't recommend that people try and replicate Buffett's stock picking style, and Buffett doesn't recommend this himself either, but there's still a great deal of value, I think, in trying to learn from and, in many ways, emulate the way he thinks about money and investing in general. With that said, this is probably a good place for our standard required disclosure that listeners should do their own research, seek their own expert opinions on their unique financial matters, and we're just having a general conversation. But here's the thing, Buffett's track record is legendary to the point of him being declared the richest person on the planet at one point in time, and he's still well in the top 10 today. You throw some incredible statistics about performance. I don't know. You see these numbers all over the place, but I will say even recently, even at the end of this incredibly long run, his performance has still been remarkable.

0:02:31.1 Scott Oeth: Last year, in 2024, which was a really strong year for stocks, Berkshire Hathaway was up 27%. Fantastic returns, but to me, even more impressively, well, the investment world has been falling in disarray for the first quarter of 2025. Berkshire Hathaway stock has stayed well into the positive double digits. Last I checked, it's up about 13% on the year. The S&P 500 is negative, down about 5%, and that's after climbing way back. So, really impressive performance, almost no matter how you slice it. So, I think, three of the key lessons, CJ, really are putting time on your side is number one. Second is that valuations, the price you pay for things, matter a lot. Lastly, is really around mindset and optimism and gratitude. So, with that first one, time, while the stories of Buffett's brainpower and focus are the stuff of legends, much of his investment story really has to do with putting time on his side. I like this because right now there's probably not many of us who can try and match investment with Warren Buffett, but the good news is we probably don't have to achieve and reach reasonable financial goals and have a great deal of success.

0:03:42.8 Scott Oeth: This really is a large part of financial planning based investing, which I think for most people is the best way to go about is, think about how to deploy your money and investing along an appropriate timeline. So, what do I mean when I talk about Buffett and time? A couple stories. As you mentioned he's 94-years-old. He says he was inspired to start all this business when he was seven-years-old. He checked out a book from the Omaha Library called One Thousand Ways to Make $1000. Just all these old business ventures he got into as a kid, selling chewing gum, selling Coke, selling magazines, working at his grandfather's grocery store, paper boy, but not in the way we think about. He built up a massive paper route and was making in school, more money than his teachers.

0:04:29.4 CJ : Oh, my gosh.

0:04:30.5 Scott Oeth: So, he got into this early and showed a lot of aptitude early on. He'd buy old pinball machines and fix them up and put them in barbershops. And he was just making great amounts of money early on. He says he purchased his first stock at age 11. So, really amazing, and some of his quotes I love. He says, "Someone's sitting in the shade today because someone planted a tree a long time ago." So, try to get started early, if possible. It definitely can work on your side. He talks about owning stocks and owning companies, and a couple of real key ones. He says, his favorite holding period is forever. A lot of people buy and make a gain and capture that. He says he'd like to hold it forever, but I think probably even more importantly, and this is how I think about, let's say, deploying money and investing to match up with your goals. He says, if you're not prepared to hold shares for at least 10 years, you probably shouldn't invest in them for one minute.

0:05:26.3 CJ : Wow.

0:05:26.9 Scott Oeth: So, that's real key, and, CJ, one that I just love, probably my favorite, is he was describing his investment style in one of his famous annual letters, and he has this quote in there. He said, "Lethargy bordering on sloth remain the cornerstone of my investment style." So, that's great, but it's not just getting started early and giving investments time to work and not trying to put money that you need in the short term into a long-term investment, but he stuck with it for a long time, and he talks about this. He's happy that he found something he loved, that he's good at, that he's passionate, and he just kept going. There's a wonderful investment writer named Morgan Housel. He wrote a great book called, The Psychology of Money. I really recommend it, but he tells a lot of stories in that book, and he says, he's talking about compounding and how that works over time with money. I mean, Housel makes a point that 99% of Buffett's net worth was accumulated after he was 65-years-old.

0:06:22.7 CJ : Wow.

0:06:24.3 Scott Oeth: So, if you have the health, if you're lucky enough to find something you love, he kept going earning business-wise, but also, of course, the investments, keeping those in the market. So really important there. On the price and valuation, just a point or two there. There's an old investments saying of you want to buy low and we want to sell high. Makes all the sense in the world, right, CJ? But all human impulses are working against this and urging people to do the opposite. I've seen it throughout the years of my career. It sounds so simple on paper. Folks will nod their head and say, yes, yes, I get it. We want to buy when things are cheap and sell when they're high if we sell at all. Warren Buffett says hold forever, but it's very, very tough to do in real life. You have times like the first quarter of 2025, and people have all sorts of reasons why it feels like it's not a good time to invest, despite this is when things are cheap. Buffett really, when you do get into his investment style, he's what's called a value investor. He's a bargain hunter. He wanted to buy quality holdings, attractive investments, but he wanted to buy them on sale when others are fearful, when things look cheap, and so much of the story of his investment performance is about buying things that are out of favor but still quality holdings and buying them cheaply. So, I think that's something we can all pay attention to and try not to get caught up in chasing what's hot and what may be working now because those are things where the prices are often bid up, and you and I have talked about many of those themes over the years.

0:08:00.4 Scott Oeth: The last one, CJ, really is around mindset and optimism and gratitude. So much of what Buffett talks about, especially it seems to me later in his career, is optimism. I can remember in 2008, during the global financial crisis, you talk about bleak times, and when it looked like the sky was falling, he came out with an op-ed in the New York Times and the headline was just very bold: “Buy American. I am.” October of 2006. and he continually tells stories of long-term optimism, optimism in businesses, people going to work, trying to develop products, services, manufacture goods, doing their best, and optimism in markets and really capitalism and the way it works, and especially America over long periods of time. Even when things look grim, he retains that confidence that it'll work out in the long run. So, one last big takeaway, Buffett talks a lot about gratitude. He talks continually about how he feels like he's very lucky, that he's matched up with something he's very interested in, he's passionate to the point of being obsessed, probably really unhealthy for most people the way he assumed them in life and his career, but finding a field that he had talent for, he was extremely interested in, and he had the opportunity, and he talks about genetic lottery for being born in America and having the opportunity to participate in all the opportunities that abound.

0:09:34.3 Scott Oeth: So, another great writer is a psychologist named Daniel Crosby. He's a PhD psychologist. He's also done a lot in the financial planning field, and he wrote a great piece on this, and I think this is a wonderful takeaway. How would you like to double your income, CJ?

0:09:50.9 CJ : I'd be all right with that.

0:09:52.8 Scott Oeth: You wouldn't complain?

0:09:54.0 CJ : No.

0:09:54.8 Scott Oeth: Crosby points out in his research that people who practice gratitude and reflect on what's positive in their life and what's working well and the things that they can appreciate, he points out that people who practice gratitude experience a 10% increase in their happiness, and that this is comparable boost in happiness to doubling your income. So, there's a great freebie for everyone. Try and reflect on what's working well, practice gratitude, and according to Dr. Daniel Crosby, you'll be as happy as if you got a doubling of your paycheck.

0:10:28.5 CJ : Hey, I got to share with you that my favorite photo of Warren Buffett was taken by, I don't know, just some bystander. He was sitting on a park bench with Paul McCartney having an ice cream cone in Omaha, and it was such a cool little... Just that's Warren Buffett, right? Just a regular guy. A genius, but just a regular guy.

0:10:51.0 Scott Oeth: That's right.

0:10:51.8 CJ : All right. Scott, thank you so much. Really appreciate these. We'll check in again in a month.

0:10:57.4 Scott Oeth: Sounds great. Thank you.