Advice From Warren Buffett

In Miletus, people mocked Thales. According to Aristotle in the Politics, they taunted the philosopher with his poverty and said philosophy was of no use. The ruins of Miletus stand today in Aydın, in western Turkey.

As the story goes, Thales used his knowledge of the stars to predict that the olive harvest would be plentiful that year. It was still winter. With the little money he had, he put down deposits on every olive press in Miletus and on Chios. Since no one bid against him, he rented the presses cheaply.

When the harvest came, everyone wanted presses at the same time. Thales let them out at whatever price he liked and made a good deal of money. In doing so, in Aristotle's words, he showed that philosophers could easily be rich if they wished, but that this was not what they were after.

Aristotle adds a small note to the story: people attributed the gain to Thales's wisdom, whereas the method he used was a general one anyone could apply. Looking while others are not. Being ready before everyone wants the same thing at the same time.

A deposit in Omaha

Some two and a half thousand years later, one of the best practitioners of the same method was Warren Buffett. He took the reins of Berkshire Hathaway in 1965, at the age of thirty-four. On 1 January 2026 he handed over the role of CEO to Greg Abel; on 18 September 2026 he became chairman emeritus and remained on the board.

Buffett's learning story also begins with a deposit. In his 1984 letter he calls Benjamin Graham's The Intelligent Investor by far the best book ever written on investing. As he tells it in his 1995 letter, he went to Columbia in 1950 not for the degree but to learn from Graham. On a Saturday in January 1951 he took the train to Washington to get to know GEICO, the insurance company his teacher chaired. The building was closed; he kept knocking on the door and talked for around four hours with the only person working inside, Lorimer Davidson, who would later become the company's CEO. For your reading list, you can also have a look at 25 books every founder should read.

A correction first

Many of the quotes attributed to Buffett online have no clear source. One of the most common, "don't put all your eggs in one basket", is almost the opposite of what he wrote. In his 1993 letter he argues that concentrating a portfolio in a small number of companies can reduce risk, to the extent that it forces the investor to think harder about each business. The advice below comes straight from the Berkshire Hathaway shareholder letters.

Know the boundaries of your circle of competence

1996: "You don't have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital." Thales's circle was the stars and olives, and that is exactly where he put his deposit.

Be fearful when others are greedy

1986: "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." Thales rented the presses in winter, when nobody was interested in them.

Look at the business, not the price

In 1989, also crediting his partner Charlie Munger: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. Charlie understood this early; I was a slow learner." The same letter adds: "Time is the friend of the wonderful business, the enemy of the mediocre."

Don't waste effort patching a leaky boat

1985: "Should you find yourself in a chronically-leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks." Persisting with a bad business is not loyalty; it is a cost.

Leave a margin of safety

In his 1990 letter Buffett recalls the motto in which Graham distilled the secret of sound investment: "Margin of Safety". He writes that forty-two years after reading it, he still thinks these are the right words. As Aristotle tells it, Thales's risk was also limited to the small deposit he paid; had the harvest gone badly, his loss would have gone no further.

Prepare before the tide goes out

1992: "You only find out who is swimming naked when the tide goes out." Poorly protected businesses look as solid as anyone else in calm times.

Monopoly and moat

In the passage where he tells Thales's story, Aristotle gives the move a name: "monopōlia". It is made of the Greek "monos", single, and "pōlein", to sell; it means the right to sell alone. The English "monopoly" comes from this word via Latin. The Turkish "tekel" builds the same idea from its own materials: "tek" (single) and "el" (hand).

But Thales's monopoly lasted one season. What Buffett looks for is more durable: in his 1995 letter he writes that he seeks economic castles protected by unbreachable "moats". In 1986 he likens GEICO's cost advantage to a moat protecting a valuable castle, and describes how the executive running the company kept widening that moat by cutting costs. That is the difference: a monopoly is a momentary opportunity, while a moat is dug afresh every year.

Final word

In the letter Buffett wrote to shareholders on 18 September 2026, completing the handover, there is this sentence:

"From the very beginning, Charlie and I sought shareholders who think in decades, not quarters."

Will the idea you are putting a deposit on this winter still be worth something ten years from now?