Aside from being recognised as one of the most successful investors of all time, Warren Buffett is also known for his invaluable wisdom. Now, an old video of the Berkshire Hathaway CEO urging investors to develop their own insight while buying stocks, houses or a business has resurfaced on social media.
Mr Buffett was speaking during Berkshire Hathaway’s 1994 annual meeting when he advised investors not to trust forecasts or projections, especially from someone who has a financial interest in making those projections. “Don’t ask the barber whether you need a haircut,” Mr Buffett told the audience.
Watch the video below:
“Don’t ask the barber whether you need a haircut.”
– Warren Buffett
Warren and Charlie discuss the importance of developing your own insights rather than relying on the projections of “experts.” This requires only doing things you can understand. Keep it simple.1994 AGM
— Compound248 (@compound248)
At the 1994 meeting, Mr Buffett’s longtime partner Charlie Munger also recalled that they were once offered a thick book of $2 million worth of projections during the process of buying a business. “We almost paid $2 million not to look at it,” the legendary American investor joked to the audience.
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“I do not understand why any buyer of a business looks at a bunch of projections put together by a seller…or his agent,” Mr Buffett continued.
The Berkshire CEO further added that obtaining information or trusting analysis from someone who has an interest in a particular deal is detrimental due to its innate bias. He stated that it is “very naive” to not have some idea about the future of the business that one wants to invest in and listen to advice from an “expert”.
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“If we don’t have some idea ourselves of what we think the future is, to sit there and listen to some other guy who’s trying to sell us the business or get a commission on it to tell us what the future’s going to be… it’s very naive,” he said.
Warren Buffett is a businessman, philanthropist and one of the most successful and widely respected investors globally. He is known as the “Oracle of Omaha” and his investment philosophy is followed widely across the globe.
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