Warren Buffett, the 94-year-old “Oracle of Omaha” and billionaire, built his fortune on timeless principles: staying disciplined and thinking long-term. As one of the greatest investors of all time, his annual letters to Berkshire Hathaway shareholders are a must-read if you’re serious about investing and building wealth.
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Here are four takeaways from his latest letter worth applying to your financial life this year.
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Fix Mistakes Fast
Buffett’s honesty about his past investment mistakes is one of the most refreshing things about his letters. In this year’s note, he admitted to poor judgment in some business acquisitions and also emphasizes that delayed action may compound a mistake.
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“Sometimes I’ve made mistakes in assessing the future economics of a business I’ve purchased for Berkshire — each a case of capital allocation gone wrong … At other times, I’ve made mistakes when assessing the abilities or fidelity of the managers Berkshire is hiring,” he said.
“A decent batting average in personnel decisions is all that can be hoped for,” he added. “The cardinal sin is delaying the correction of mistakes or what Charlie Munger called ‘thumb-sucking’ problems, he would tell me, cannot be wished away. They require action, however uncomfortable that may be.”
Ownership Builds Wealth
In his letter to shareholders in February, Buffett also explained why Berkshire had built up $334 billion in cash at the close of 2024.
He assured investors that most of Berkshire’s money remains invested in equities, particularly U.S. equities and that is not going to change anytime in the near future.
“Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities,” Buffett explained. “That preference won’t change.” He believes that ownership, especially in solid and long-term assets, is how you build and protect wealth.
“While our ownership in marketable equities moved downward last year from $354 billion to $272 billion, the value of our non-quoted controlled equities increased somewhat and remains far greater than the value of the marketable portfolio,” he added.
One Smart Decision Can Make an Immense Difference
Sometimes, it only takes one smart move to change the entire trajectory of your life or financial journey. In his annual letter, Buffett reflects on how a few choices made all the difference.
“I’ve had many pleasant surprises in both the potential of the business as well as the ability and fidelity of the manager,” Buffett said. “And our experience is that a single winning decision can make a breathtaking difference over time.”
For example, acquiring GEICO as a business decision, hiring Ajit Jain and meeting Charlie Munger — his partner, advisor and lifelong friend. “Mistakes fade away; winners can forever blossom,” he said.
In other words, if you’re able to make just one winning financial move, like investing early in a solid asset or launching a side hustle, it can create wealth that compounds for decades.
Think in Decades, Not Months
Even though Berkshire’s ownership in marketable equities moved downward last year from $354 billion to $272 billion, Buffett’s not that worried. The company’s operating businesses grew stronger and his focus remains on the long term.
“Over time, we think it highly likely that gains will prevail — why else would we buy these securities? Though the year-by-year numbers will swing wildly and unpredictably,” he said. “Our horizon for such commitments is almost always far longer than a single year. In many, our thinking involves decades. These long-termers are the purchases that sometimes make the cash register ring like church bells.”
So, don’t panic when the markets feel shaky. Zoom out and understand that not every year will be a winner.
This article originally appeared on GOBankingRates.com: 4 Money Lessons To Learn Now From Warren Buffett’s Early 2025 Investing Moves