Warren Buffett, nicknamed the “Oracle of Omaha” for his wise investment decisions, and billionaire chairman of Berkshire Hathaway, receives a lot of press for his financial decisions, lifestyle and investment decisions. When Buffett makes a move, the world pays attention.
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However, alongside the fame of being one of the richest people in the world comes judgments and perceptions that are not true. Here are seven myths about Warren Buffett that you should get rid of today.
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He always knew Berkshire Hathaway would succeed
Given Berkshire Hathaway’s success in making money, it’s easy to imagine that Buffett bought the company knowing full well that it would one day make him and others as much money.
However, it actually started as a textile company on the verge of failure. He thought he could make money by strengthening what he thought was one of the last textile mills in the country. In fact, even though the industry was in peril, Buffett also purchased another textile factory in 1975.
While he was certainly confident in his ability to turn a profit, even he couldn’t have imagined just how successful he would be.
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This is a type of stock-only investor
While some billionaires invest in risky, speculative things like art and cryptocurrencies, Buffett is known for taking a more tried-and-tested route. This led many people to believe that he only invested in stocks, particularly those of dividend-producing companies with a strong history of stability and profitability.
Yet in August 2023, Buffett told CNBC that Berkshire Hathaway had purchased $10 billion worth of U.S. Treasuries and planned to purchase another $10 billion worth.
He never makes rash investment decisions
With a reputation for making researched, thoughtful, and prudent investments, it’s easy to believe that Buffett never makes rash decisions either. And while that’s mostly true, even Buffett hasn’t been immune to the panic that followed the economic losses caused by the COVID-19 pandemic.
Buffett sold most of his airline stocks as they hit bottom due to lack of travel, causing him to lose billions of dollars. These stocks eventually rebounded in late 2020, but Buffett was unable to recoup those losses.
He thinks money is king
A man as old school and frugal as Buffett could be seen as adhering to the old adage “cash is king” and making sure to keep much of it on hand. Yet in a 2009 interview with Charlie Rose, Buffett said that cash is actually a poor choice for anyone hoping to maintain or grow their wealth, because cash only loses its value over time. . Although cash can give you security, it cannot give you more.
He avoids technological stocks
Buffett is old enough to have started investing at a time when tech stocks were in their infancy. While tech was booming, even though Buffett avoided tech stocks for years, even the old Luddite joined the group by investing in Apple, which now makes up more than 42.5% of his portfolio.
He lives the lavish lifestyle of a billionaire
Anyone who thinks Buffett lives a flashy life isn’t paying attention. Unlike other billionaires who seem happy to show off their luxury cars, expensive yachts and other big expenses, Buffett is famous for being frugal, driving a modest car, living in the same house he’s had for years and even eating at McDonalds. You won’t see the Berkshire-Hathaway chairman showing off expensive watches or suits: he’s a practical man.
He advocates extreme frugality
However, this has led to another myth, that he practices and preaches “extreme” frugality – which is simply not true. At Berkshire Hathaway’s 2008 shareholder meeting, Buffett said he did not advocate extreme frugality.
Although he admits to being a proponent of “living within your income,” he said that if you earn a reasonable income and have safety nets like retirement accounts, there’s no harm in spending more on things like a family vacation. He even said there were benefits to spending money on his family.
It’s easy for people to both project their beliefs onto a man in Buffett’s position and assume things about him. Buffett lives a transparent enough life that anyone online can quickly figure out that what you see is pretty much what you get when it comes to the Oracle of Omaha.
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This article was originally published on GOBankingRates.com: 7 Warren Buffett Myths You Should Stop Believing
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