Warren Buffett's Investment Philosophy - 1985 Interview

Narrator introduces Warren Buffett's remarkable investment performance - $10,000 invested in Berkshire Hathaway in 1965 would be worth $1 million by 1985. Buffett learned from Ben Graham at Columbia and has never courted publicity. His net worth exceeds $500 million, and he recently became the largest shareholder in the Capital Cities-ABC merger.

Buffett explains his investment philosophy in simple terms: Rule #1 is don't lose money, Rule #2 is don't forget Rule #1. He emphasizes buying things for far below what they're worth and buying a group of them to avoid losses.

Buffett argues that the most important quality for an investment manager is temperamental, not intellectual. Success doesn't require genius-level IQ or advanced skills, but rather a stable personality that is comfortable neither following nor opposing the crowd. He quotes Ben Graham: you're right because your facts and reasoning are right, not because others agree or disagree.

Buffett explains how he differs from 90% of money managers by focusing on owning pieces of businesses rather than predicting short-term stock movements. He values businesses first without looking at prices, then checks if prices are way out of line. The real test is whether you'd care if the stock market closed for five years - if it's a good investment, you shouldn't care.

Buffett defends his decision to stay in Omaha rather than move to Wall Street. He explains that Omaha provides all the facts needed without the overstimulation of Wall Street. Being away from the crowds allows him to maintain a long-term focus, which is conducive to profits. He doesn't need to be in Washington to value the Washington Post or in New York to value other companies - it's purely an intellectual process better done without static.

Buffett discusses his investment philosophy of staying within his circle of competence. He's never owned IBM or technology companies because he doesn't understand them. Using a baseball analogy, he explains that unlike real baseball, investors don't have called strikes - you can wait for the perfect pitch indefinitely. Most professional managers struggle with this because boredom and client pressure force them to swing, but Buffett is comfortable waiting months or years for the right opportunity.

In the final segment, Buffett explains why his simple approach isn't widely adopted. Academics focus on complex variables like buying stocks on certain days or in election years because the data exists and they've learned to manipulate it. He quotes 'to a man with a hammer everything looks like a nail.' These factors aren't important - a businessman wouldn't care about the day of week when buying a business, so why should stock investors?