Billionaire value investor and the former Berkshire Hathaway Chief Executive Officer (CEO), Warren Buffett’s old video resurfaced on the social media platform X, where he shared what mistakes investors make while trying to get rich via the stock markets.
Taking a reference from the “The Science of Hitting” book written by the late baseball pro Ted Williams, Buffett said that there are ‘no called strikes’ in investing, like there is in the sport of baseball.
The billionaire investor said that people can throw any stock towards him and he doesn’t necessarily need to swing at it, and in this case, no one will call out “strike.” Hence, this gives investors the opportunity to wait and review several other companies on a day-to-day basis.
Buffett recommended that people should only invest in something they understand and at a price they like, and not think about hitting or missing a strike.
“In investing, there’s no called strikes. People can throw Microsoft at me, any stock, General Motors, and I don’t have to swing. And nobody’s going to call me out on called strikes. I only get a strike called if I swing at a pitch and miss, so I can wait there and look at 1,000s of companies day after day, and only when I see something I understand and when I like the price at which it’s selling. Then if I swing, I hit it, fine, if I miss it, it’s a strike,” said Warren Buffett.
In baseball lingo, a strike is when a batter swings and misses or does not swing but passes through a ‘strike zone’ or hits a foul, then after three consecutive strikes, the batter will be out.
What mistakes do people make?
Warren Buffett also highlighted that this analogy gives investors a chance at an ‘enormously advantageous’ game, and people often make a terrible mistake of thinking that they have to have their opinions on everything.
“But it’s an enormously advantageous game, and it’s a terrible mistake to think you have to have an opinion on everything. You only have to have an opinion on a few things,” said Buffett.
The ‘Oracle of Omaha’ also said that he has often advised students that they have 20 chances to make their investment decisions for life. If they think hard about those limited options, they are likely to get rich.
However, he also said that people don’t need 20 right decisions in their investment journey as well; maybe four or five right ones are likely to do it over time.
“In fact, I’ve told students, when they got out of school, they got a punch card with 20 punches on it, and that’s all the investment decisions they got to make in their entire life. They would get very rich, because they would think very hard about each one. And you don’t need 20 right decisions to get very rich, four or five will probably do it over time,” said the billionaire investor.
Disclaimer: This story is for educational purposes only. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.