Warren Buffett Steps Down as Chairman of Berkshire Hathaway: Here Are 3 of His Biggest Investing Lessons You Need to Know

From the start of 1965 to the end of 2025, Berkshire Hathaway's (NYSE: BRKA) (NYSE: BRKB) share price climbed at a compound annual rate of 19.7%. On a cumulative basis, the monster return of 6,099,294% is jaw-dropping. A hypothetical $10,000 investment made at the start of this period would've been worth almost $610 million as of Dec. 31 of last year.

Credit goes to Warren Buffett and his incredible ability to allocate capital in value-accretive ways that benefit his shareholders. The Oracle of Omaha is viewed by many as the greatest investor ever. Anyone who has exposure to the stock market can learn from him.

Even though he is no longer chairman of the conglomerate that he built, his advice is invaluable. Here are three of Warren Buffett's biggest investing lessons that you need to know.

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Buy businesses, not stocks

The internet has enabled the democratization of information. Further enhanced by the advent of smartphones and faster connectivity speeds, everyone has access to as much financial data as their hearts desire. This is great since it breaks down the walls that historically benefited institutions, in favor of individuals.

The downside, though, is that the firehose of information encourages frequently checking your brokerage app to see how the stocks you own are performing. Furthermore, with fee-free trading, investors can easily find it tempting to jump in and out of positions unnecessarily.

Buffett's advice should be entrenched in the minds of investors. He emphasizes how critical it is to buy businesses, not stocks. Instead of viewing your portfolio as charts on a screen, think about what you actually own. You have a stake in a real company that sells real products and services to real customers.

This framework will change your perspective. It forces you to know the underlying fundamentals of businesses that you're interested in. Being familiar with what a company does, how it makes money, what markets it operates in, who it sells to, its competitive advantages, management team, and financial profile, for example, supports a comprehensive understanding. These are the variables that matter.

Focus on the long term

To further add to the point that investing successfully requires a focus on buying businesses instead of stocks, investors should extend their time horizons. Buffett became a centibillionaire and produced life-changing wealth for Berkshire Hathaway's shareholders by thinking in terms of decades. He couldn't care less about the next three months or what the coming year would bring.

It's certainly not easy. However, ignoring day-to-day price fluctuations is key. Real wealth is built not by timing the market, but by spending time in the market and letting compounding work.

Look at Berkshire Hathaway's most lucrative investment. It purchased Apple shares in the first quarter of 2016. Since the start of that year, the Magnificent Seven stock is up 1,180% (as of Sept. 24). Had Buffett sold shares in late 2018, for example, when they were more than 30% off their peak, massive gains would've been missed.

Buy a low-cost index fund

Actively picking stocks isn't the only way to access the equity market. Investors can take a passive approach. To be clear, though, this doesn't mean your performance will suffer.

Buffett has suggested in the past that buying and holding a low-cost S&P 500 index fund, like the Vanguard S&P 500 ETF (NYSEMKT: VOO), is the best investment option for most people. The benchmark's trailing 10-year performance is impressive, as it has produced a total return of 319%. It carries a cheap expense ratio of just 0.03%, and owning it requires no time or effort on the part of investors.

Most people simply don't have the time or skills to choose individual companies and manage their portfolios. Going the passive route is completely acceptable, and the long-term results can be tremendous.

Neil Patel has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.