Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 33

We’re not like Buffett, but we can learn from him

More words have been written about Warren Buffett than any other investor in history. Why do we adore hearing about him so much? Is it his folksy nature? His man-of-the-people demeanour? His ability to make the world of investing seem less daunting? Or is it because his wealth has come from 'playing the share market', as any of us can now do with a decent internet connection and some spare cash or our own superannuation fund?

I believe the reason he is so idolised in Australia is our ability to relate to him as an individual. Maybe it's because he lives in an average house and drives an average car. Or maybe it’s because he doesn't sound like a normal 'finance guru'. Our affinity is further enhanced by our love of a punt, of placing a bet that might pay off big. Whatever the reason, Warren Buffett has a level of credibility most people in the public eye can only dream about, and will never obtain.

The thought of getting rich punting on the share market has great appeal, especially when compared to the work required to build wealth by putting sweat equity into our careers or businesses. We look at Buffett and think to ourselves, "He's a billionaire from punting the share market, and he has the ruffled looks and laconic nature of Granduncle Bill who left school aged 16. How hard can this share investing caper be?"

So just how different is Buffett from you, me and Granduncle Bill?

  • He started early. Warren Buffett’s dad owned a stockbroking firm. That helps. Young Warren is reputed to have bought his first shares aged eleven and was a seasoned investor by 15.  At 15, I was more interested in working on my cover drive than on covered call strategies.
  • He's seriously smart. Buffett obtained a Master of Science in Economics degree from the Ivy League Columbia University in 1951. His lecturers included Benjamin Graham and David Dodd, who would later collaborate on Security Analysis and the more approachable The Intelligent Investor, two investment texts treated with an almost holy reverence by advocates of value investing. Buffett is their star graduate. He is just as competent reviewing financial statements as he is using investment formulae to compound or discount money through time.
  • He started his investment operation essentially as a private fund structure which morphed into a public investment conglomerate only much later. His first investment vehicle, launched in 1956, was a limited partnership called, unsurprisingly, Buffett Partnership. This legal structure allowed Buffett, as General Partner, to pool the contributions of a small number of wealthy passive investors (Limited Partners) and invest on their behalf. More importantly this ‘sophisticated investor only’ structure meant he did not have to lodge portfolio position filings with the Securities & Exchange Commission in his early years.

Scrutiny of his decisions from the regulator and third parties was thus significantly lower than for retail mutual (managed) funds. This advantage, combined with his penchant for taking influencing stakes in companies, allowed Buffett to operate more like a private equity manager than a traditional share fund manager, particularly before Berkshire Hathaway became his investment vehicle of choice during the seventies. One cannot therefore compare Buffett’s track record with that of a typical mutual share fund, given the degrees of freedom Buffett has enjoyed that a normal manager would not be allowed. It’s akin to comparing apples with pineapples. Sounds similar, but very different in nature.

What can we learn from Buffett? Whilst we clearly can’t all invest like Warren Buffett, below are some behavioural clues as to what makes him so unique. Tuning into these may just make you a better investor.

Turn off the noise

If you can't help but take note of the latest market update to find out if you are richer or poorer than yesterday, you are most definitely not like Warren Buffett. The stream of finance news that now so pervades our daily lives Buffett would mostly regard as irrelevant noise. Part of his success comes from basing himself in Omaha, Nebraska and not on Wall Street, thereby removing himself from the global locus of investment noise. It’s the equivalent of Australia's richest share investor choosing to operate from Devonport, Tasmania.

Building financial security requires great self-control

Investing is saving dressed up in fancy attire. At its core is the deferment of immediate gratification for a (hoped for) higher level of gratification in the future. This deferment of pleasure is psychologically challenging, requiring a degree of emotional control that is hard for most to maintain. It is here that Buffett has us all covered. His self-control in living modestly and deferring consumption by reinvesting dividends is legendary, as is his investment horizon in being far beyond what most individual investors would consider the long term.

Five years is not the long term, try 15 for starters

Whilst we scrutinise the latest returns from our super fund, investment manager or share portfolio, Buffett looks at investment performance across multiple years, not quarters. Who has that kind of time to waste in building wealth, right? Well, Buffett is now 83. He did not become a household name (at least not in Australia) until well into his sixties. And he started his first investment partnership before he turned 28.

To paraphrase Buffett himself, by adopting a very long investment horizon he can more confidently treat the share market as a weighing machine that should, in time, correctly weigh its constituent companies by their true market worth, rather than as a talent show voting machine gyrating excitedly around the short term popularity of hot stocks or sectors. Few have his ascetic-like discipline when it comes to focussing on the distant future rather than the here-and-now.

Putting Warren Buffet’s long-term approach into perspective, when he started the Buffett Partnership, Menzies was in the Lodge, Eisenhower was in the White House and a man-made object had yet to orbit our planet. He is the antithesis of every get-rich-quick investment scheme spruiker you might ever come across.

So which of Buffett’s technical or personality characteristics could you genuinely incorporate into your investment decision-making process, given your unique blend of investment skills and behavioural traits?

 

Harry Chemay is a consultant to superannuation funds on issues relating to retirement. He was previously an Associate at Mercer and a Certified Financial Planner. 

 

  •   26 September 2013
  •      
  •   

 

Leave a Comment:

RELATED ARTICLES

What do fund managers mean by Quality Investing?

A fortune built on defying the pull of theory

Behavioural reasons why we ignore life annuities

banner

Most viewed in recent weeks

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

Is it time to bail on Australian stocks?

For generations, Australian investors have backed banks, miners and dividends. But has that loyalty come at a cost? A look at the numbers raises an uncomfortable question about where future returns will come from.

Testamentary trusts survived the trust tax. The drafting battle has just begun.

The fight over testamentary trusts looked settled. Then the draft legislation arrived. Hidden in a technical detail is a question that could force many families to rethink wills they thought were already future-proof.

Meg on SMSFs: What do we think about reversionary pensions these days?

Reversionary pensions have long been a staple of SMSF estate planning, but are they still the best option? Meg Heffron revisits a once-clear favourite and asks whether changing super rules have shifted the balance.

How does the 4% rule stack up?

The 4% rule has long been retirement's gold standard. But after a difficult period for investors, fresh analysis suggests a more conservative approach may significantly improve the chances of making savings last.

The new capital gains tax trap for your portfolio

Investors have long accepted one portfolio rule without much question. A major tax shift could change that calculation entirely, forcing difficult trade-offs between risk, discipline and an overlooked cost lurking beneath.

Latest Updates

Exchange traded products

It’s time for LICs to die

A high-profile dividend cut and a prominent fund manager’s apology have reignited a long-running debate. If investors can access similar exposures more cheaply and efficiently elsewhere, what exactly is keeping LICs alive?

Taxation

Will investors be better or worse off under new housing tax changes?

Housing tax reforms have sparked warnings of market turmoil and promises of greater fairness. But after modelling nearly two decades of property data, the results suggest winners and losers may not be who many investors expect.

Retirement

Three considerations before reshaping your legacy plan

Many retirees hope to leave a legacy. Proposed trust tax reforms could force families to rethink. The question is not how much to leave behind, but whether today's inheritance plans will still make sense as circumstances change.

Investment strategies

Why experienced investors still get markets wrong

Retirement is approaching. Markets are noisy. And every headline seems to demand action. The biggest investment risk isn't fear, greed or market volatility, it often arrives disguised as research and sensible risk management.

Shares

Why pay more for less?

Conditions were stacked in favour of professional investors in 2026. Most still fell short, raising questions about where investors should look for value. Meanwhile, an alternative strategy continued to make its case.

Investment strategies

Bleeding air out of the bubble

Equity valuations have fallen sharply over the past year, yet investors have largely been spared the volatility and losses that typically accompany a de-rating. What explains this unusually orderly reset? Here are five key drivers.

Strategy

Has AI gone rogue?

We worry about AI becoming conscious. But what if consciousness isn't the issue? The more unsettling possibility is a machine capable of pursuing objectives relentlessly, without motives, emotions, or awareness of any kind.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.