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👑 Legends of Investing · Lesson 2 of 13 · 10 min

Warren Buffett — The Oracle of Omaha

🎯 He bought his first stock at 11, is worth well over $100 billion, and still lives in the Omaha house he bought in 1958 for $31,500. The richest man you'll ever study, and arguably the cheapest. Both of those are the point.

💡 Key idea

Time is the friend of the wonderful business and the enemy of the mediocre.

🧠 Why it matters

Buffett evolved Graham's strict 'cigar butt' value approach into 'buy wonderful companies at fair prices.' He focuses on businesses he understands, with strong moats (competitive advantages), great management, and the patience to hold forever. Berkshire Hathaway has compounded at ~20%/year for 60 years.

🌍 In the real world

💰 In 1988, Buffett spent $1 billion buying Coca-Cola stock when everyone thought soda was boring. Today that stake is worth roughly $28 billion AND pays Berkshire over $800M a year in dividends. He hasn't sold a single share. That's the power of buying right and waiting.

📌 Takeaways

  • Buy great businesses, hold forever
  • Stay in your 'circle of competence'
  • Patience > genius

✅ Test yourself

What's Buffett's biggest investing principle?
  1. Trade often
  2. Buy great businesses and hold them for the long term
  3. Time the market perfectly
  4. Only buy IPOs

Answer: B · Buy great businesses and hold them for the long term

Buffett famously said his favorite holding period is 'forever.' He buys quality companies and lets compounding do the work.

What's a 'moat' in Buffett's framework?
  1. A water barrier around a castle
  2. A sustainable competitive advantage that protects profits
  3. A type of bond
  4. A trading strategy

Answer: B · A sustainable competitive advantage that protects profits

A 'moat' is what protects a company's profits from competition — brands, network effects, switching costs, scale advantages.

Why is Buffett's wealth so remarkable?
  1. He picked one lucky stock
  2. He compounded patiently for 70+ years — 99% of his wealth came after age 50
  3. He inherited it
  4. He won the lottery

Answer: B · He compounded patiently for 70+ years — 99% of his wealth came after age 50

Buffett's wealth shows the power of compounding. Most of his roughly $150B came after he turned 50 — time + patience + good decisions.

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