The Patient Investor

In May, legendary investor Warren Buffett announced he will retire as CEO of Berkshire Hathaway at the age of 95. Sixty years ago, Buffett took over Berkshire Hathaway, a struggling New England textile company, and built it into a powerhouse that operates everything from insurance companies to household brands like Duracell batteries.

Along the way, he became known as the “Oracle of Omaha” due to his reputation for carefully identifying undervalued companies and sticking with them for the long haul. It’s a strategy that has served him well. Today, he is the sixth richest person in the world with a net worth of about $154 billion.

Throughout his career, Buffett has shared some of the secrets to his success, often through his famed—and frequently funny—shareholder letters. Below are some of our favorite insights that continue to guide investors of all kinds.

“Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community…We never try to anticipate the arrival or departure of either disease. Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

Investing is carried out by people, and people are emotional. As a result, human behavior plays a huge role in the movements of markets. The powerful impulses toward fear and greed can lead investors to hop in and out of the market en masse, often to their detriment. Buffett warns us to be wary when investors are “greedy,” as they can push prices up—sometimes unsustainably—leading to a crash. Similarly, when investors are fearful, they may miss out on powerful opportunities to invest in bargains during a market downturn.

The key to good investing is controlling emotional urges. Buffett has said: “The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”

 Bursting Bubbles

“Bubbles blown large enough inevitably pop. And then the old proverb is confirmed once again: ‘What the wise man does in the beginning, the fool does in the end.’”

During market bubbles—like the Dot Com bubble of the late 1990s or the housing boom that preceded the 2008 crash—prices rise rapidly beyond their true value driven by speculation and hype. Even investors who were initially skeptical might succumb to the urge to jump on the bandwagon, entering the market when prices are overly inflated and due for a crash. 

Buffett has also said, “It’s only when the tide goes out that you learn who’s been swimming naked.” Indeed, when a booming market reverses course, you don’t want to be the one who has taken on too much risk and is left scrambling for your clothes.

You’ve probably heard us say investing is a long-term venture. This happens to be one of Buffett’s fundamental tenets as well. One well known Buffett quote is “Our favorite holding period is forever.” He has also said, “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” 

In a world obsessed with instant results, Buffett’s long-term approach is refreshingly patient. He believes in owning high-quality companies for decades—not trading in and out based on short-term market swings. The evidence is clear: Over the long term, the stock market has historically moved higher. Committing to long-term holding periods is the best way to ride out the inevitable short-term market fluctuations that come with the historical upward trend. 

Another famous quote from Warren Buffett is “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” This quote reflects Buffett’s investing philosophy: seek quality, not just discounts. A great company can compound value over time, even if it doesn’t seem like a bargain on day one. Price matters, but quality matters too. Focus on investments with enduring value and strong fundamentals. Avoid speculative bets that look like “deals.” Don’t chase fads. Instead, implement asset allocation strategies using low-cost investments that are tax efficient. We encourage our clients to hold low-cost funds and to maintain their asset allocation strategies during periods of market volatility.

“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

Unsurprisingly, there is a lot of overlap in aphorisms about planting trees and investing. Both require planning and an early start to ensure you reap their benefits. Likewise, a well-built investment plan requires attention and nurturing, which we can make easier through disciplined approaches like dollar-cost averaging—the practice of regularly investing a set amount of money no matter market conditions—and periodic rebalancing. But mostly, wealth and trees just need time to grow.

In that sense, Buffett’s “secrets” of success have never really been secrets. They are just simple truths that all investors can follow: stay calm when others panic, resist the hype, invest regularly and think long term. But even with these insights, it’s not always easy to stay the course—especially when markets get turbulent. Markets evolve. Technology changes. But wisdom—tested, and timeless—endures. As Warren Buffett’s legacy reminds us, patience, discipline, and clear thinking never go out of style.

Stay patient, my friends.

Learn more about Eric Hutchens

Hello! I’m Eric, the president and chief investment officer at Allodium Investment Consultants, located in Minneapolis, MN. I am dedicated to helping clients achieve their unique goals through designing tax-efficient investment strategies and comprehensive financial planning.  In my spare time away from the office, I enjoy relaxing at my cabin in northwest Wisconsin with my wife, two sons, and two rescue dogs. I have also volunteered with my church, serving on the elder board and as a youth group leader.

The information provided is for educational purposes only and is not intended to be, and should not be construed as, investment, legal or tax advice. Allodium makes no warranties with regard to the information or results obtained by its use and disclaim any liability arising out of your use of or reliance on the information. It should not be construed as an offer, solicitation or recommendation to make an investment. The information is subject to change and, although based upon information that Allodium considers reliable, is not guaranteed as to accuracy or completeness. Past performance is not a guarantee or a predictor of future results of either the indices or any particular investment.