Anyone who regularly follows all sorts of ratings of the richest people in the world has long noticed that many names migrate from rating to rating with each update. Among such “familiar” persons is Warren Buffett, one of the largest and most famous investors in the world.

At some point, his name became almost a household word when it came to success in the field of investments and working with securities. So many people wanted to be “like Warren Buffett.” Whether you want to be “like Warren Buffett” or “like Elon Musk” or “like Jeff Bezos” or become someone that others want to emulate, you need a certain type of mindset and a certain level of intelligence to see opportunities where others do not see them and to learn to think outside the box.

You can pump up your thinking on our program ” Cognitive Science “. And today we will talk about Warren Buffett and his rules for running an investment business, which is very useful for developing intelligence.

Warren Buffett: Biography

No, this will not be a “Cinderella story” or a “poor guy” who “made it big.” Warren Buffett was born on August 30, 1930, to a fairly well-off family that was not very large at the time. He was the second of three children in the family of businessman and politician Howard Buffett.

In 1942, the family moved from Omaha, Nebraska, where Warren was born, to Washington, D.C., after his father won the election to the U.S. Congress. Warren never knew poverty or misery, and never had to worry about how he would live or whether he would have food today.

However, he was a very hard-working and responsible guy from childhood, regularly earned extra money by selling chewing gum, golf balls, stamps and other small items. You can be happy for the man that he had enough pocket money to buy goods for resale.

Warren Buffett got his first investment experience at the age of 11, when he bought 3 shares of one company for $38 each, experienced stress from the price falling to $27, and quickly sold them for $40, without waiting literally a little while for the price to soar to $202.

A simple calculation shows that if Warren had been patient then, the profit could have been almost $500:

• Costs: $38 x 3 = $114
• Total cost: $202 x 3 = $606
• Potential profit from sale: $606 – $114 = $492

In reality, Warren’s first investment profit was $6, which was deducted as a commission, and the 11-year-old investor received $5 in cash. From this incident, he learned an important lesson that an investor must be patient and not panic if prices fall.

At the age of 13, he was able to buy himself a bicycle and a wristwatch with the money he earned as a newspaper delivery boy. This is not so much an example of Buffett’s hard work and determination , but rather an indicator of the difference in the salary of a postman “here and there”. In Russia, such purchases would require not a part-time job, but several months of full-time work as a postman, even if your parents support you the entire time…

Nearing the end of high school, Warren and a friend started a more serious business, buying and repairing a pinball machine and installing it in a friend’s barber shop so that people waiting in line for a haircut could have a more fun time.

For the younger generation, we will explain that hairdressers began to practice pre-registration with the beginning of the mass distribution of telephones, when they appeared both in hairdressers and among ordinary citizens. Before the beginning of “universal telephony”, clients were served exclusively on a first-come, first-served basis.

After graduating from high school, Buffett attended the Wharton School of Business at the University of Pennsylvania, received a bachelor’s degree from the University of Nebraska, and a master’s degree from Columbia University. In 1965, he bought a controlling stake in Berkshire Hathaway, which became his main investment company for all subsequent years.

Today, his assets include shares of such well-known companies as Apple and IBM, food company Kraft Heinz Co and pharmaceutical company Teva, transcontinental railroad Burlington Northern Santa Fe and many other companies. More details about his business can be found in the article “Who is Warren Buffett and how he changed the world of investments” [ A. Polyanskaya, 2024 ].

At the same time, Warren Buffett still manages to do charity work and act in films. For example, in 2011, he played the role of a candidate for the position of regional manager in the 7th season of the series “The Office” (episodes 26 and 27). And in 2017, a documentary about Warren Buffett called ” Becoming Warren Buffett ” was released, where the main role, as you might guess, was played by him.

In 2008, Forbes magazine placed Warren Buffett, who owned $62 billion at the time, at number one on its list of the world’s richest people. At the beginning of 2025, to get to the top of the richest rankings, you would need a sum of $300-400 billion, like Elon Musk, but even with such a scenario, Warren Buffett did not fall out of the leaders.

In April 2025, as tariffs imposed by the Trump administration sent stocks plummeting, Warren Buffett was at one point the only person among the top 10 richest people on the Bloomberg Billionaires Index who gained rather than lost:

Let’s clarify that the Bloomberg Billionaires Index, launched in March 2012, is a daily ranking of the world’s 500 richest people based on their net worth [ Bloomberg Billionaires Index, 2025 ]. The ranking, as you understand, is updated daily, and now there are different numbers, but the fact that Buffett was the only one who managed to stay in the black at the height of events is very interesting.

It is interesting because Buffett has always criticized Donald Trump, starting from his first presidential term. Therefore, Buffett does not and could not have any preferences from the current government by definition. Nevertheless, his experience and intelligence were enough to continue earning not just in an unfavorable, but even somewhat hostile environment.

How does he do it? What is this “Buffett rule” that allows you to always be a winner? Well, that’s the most interesting part!

“Buffett’s Rules” and the Development of Intelligence

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In fact, we are not talking about one universal rule of Buffett that leads to success, but about a whole set of rules that Warren Buffett has developed for himself and uses in practice. In addition to the documentary “Becoming Warren Buffett”, the famous investor shares his wisdom in the books he has written.

What books has Warren Buffett written? Firstly, the book “The Rules of Wealth”, co-written with the writer and politician John Gresham [ W. Buffett, D. Gresham, 2017 ]. Secondly, this is “Essays on Investments, Corporate Finance, and Company Management” [ W. Buffett, 2009 ].

And, of course, the work should be called “Back to School! Invaluable Lessons from a Great Businessman and Investor” [ W. Buffett, 2010 ]. This is a selection of Buffett’s answers to questions from students at the Wharton School of Business at the University of Pennsylvania at a meeting held on November 12, 2004.

In addition, there are books dedicated to Buffett, written by various authors. For example, the book “Warren Buffett’s Rules of Investing” [ D. Miller, 2017 ]. You will learn a lot of interesting things if you read all these books. And in principle, if you regularly read and engage in self-education. This has a positive effect on the process of developing intelligence and thinking.

By the way, Warren Buffett himself reads 500 pages a day, which is what he advises those who ask about his secret to success in conversations and interviews [ K. Elkins, 2018 ]. He spends at least 5 hours a day on this. For a person of his age (recall that Buffett was born in 1930), this is a completely normal pastime.

For very young people, this lifestyle is hardly suitable because they still need to learn a lot in practice, not just sitting at a desk. But I think the essence of the advice is completely reasonable: you need to read regularly, preferably every day.

Warren Buffett studies mainly financial and corporate reports and, of course, the press. If you take up reading literature on your profession for at least half an hour a day, in a very short period of time you can learn significantly more than you knew before.

In the meantime, we suggest you read what conclusions Warren Buffett came to and what rules he developed for himself in life and business in general and in the investment business in particular. In the most general sense, business is an activity aimed at systematically obtaining profit, and investments are the placement of capital with the aim of obtaining profit.

Thus, investments are a type of business and one of the ways to make a profit. Under unfavorable circumstances or an illiterate approach, a business can become unprofitable and, strictly speaking, cease to be a business, because a business is something that brings in money, not takes it away.

Accordingly, investments under unfavorable circumstances or failure to take into account factors affecting profit may become unprofitable and turn from investments into expenses. The current situation in the global economy can hardly be called favorable. However, Warren Buffett, as we have already found out, manages to earn money even now.

So, there is only one thing left – Warren Buffett is able to take into account the factors that influence profit in the long term. In our article, we have already used and will continue to use such concepts as “shares” and “securities”. Let’s clarify what they are.

Securities are financial documents that confirm property rights or obligations. Securities include, in particular, shares, bonds, bills of exchange, investment units, futures and options.

Shares are securities that confirm the share of ownership of a company and secure the right of its owner to receive dividends. Thus, shares are a type of securities.

Warren Buffett’s Rules for Investing:

• Never invest in a business you don’t understand– start with something you do understand.
• Consider your investment strategy– Buffett is focused on long-term investing in quality companies that are undervalued by the market.
• Follow the news– events in the world can directly affect the position of players in the market.
• Study the real economic indicators of the company– the value of assets, profit, expenses, debts. Assess the competitiveness of the company. The market is irrational, but companies with serious assets ultimately win.
• Research the management of the companywhose securities you want to buy – look for three traits in a person: intelligence, energy and honesty. If they don’t have the last trait, don’t even worry about the other two. Buffett himself considers himself a co-owner of a business, not just a trader , and it is from this position that he approaches investments.
• Stay calm in an unstable situation– if you see a bright future, but the securities you bought are falling in price – do not panic and do not rush to sell them.
• Don’t “invest for the sake of investing”– if there are no suitable investment options, it’s better to keep what you have.

These principles are outlined in the book “The Rules of Wealth,” and they apply not only to investments, but to many other areas of business and life [ W. Buffett, D. Gresham, 2017 ].

Let’s briefly summarize these rules:

• Understand what you are investing in.
• Think like a business owner.
• Value reliability and long-term benefits.
• Don’t give in to emotions.

It must be said that Warren Buffett is not only a great investor, but also a man with a clear philosophy of business and life. He is constantly involved in charity, and in 2010 he broke all records by donating $37 billion to charity.

This is directly related to Warren Buffett’s “philosophy of wealth”. He believes that everything a person earns, one way or another, returns to society in the form of acquisitions, investments, and expenses that help other businesses and society as a whole develop, and therefore sees nothing wrong with wealth.

Warren Buffett’s Rules for Successful Business and Life:

• Remember that reputation is more important than profit– reputation takes 20 years to build and 5 minutes to lose. Buffett believes that trust is the most important asset for both a company and an individual. He avoids partnerships with people whose integrity is questionable, even if they promise big profits.
• Constantly learn– knowledge accumulates like compound interest. The ability to learn is an important competitive advantage, and it’s not about a formal university education, but about the ability to absorb new knowledge. If in the evening you know exactly as much as you knew in the morning, you’re doing something wrong.
• Be patient– good things come to those who wait. In business and life, it is not the one who rushes who wins, but the one who acts at the right moment. Warren Buffett himself can wait for years for a good deal and not give in to the general panic or hype in the market.
• Live within your means– Don’t do anything stupid just because you have money. Buffett still lives in the house he bought in 1958, drives a regular car, and prefers clothes that are comfortable for him rather than branded ones. Buffett likes to joke that he actually wears expensive suits, they just “look cheap on him.”
• Work with people you respect– life is too short to get involved with stupid or dishonest people. Buffett himself strives to build relationships only with people with whom he feels comfortable and has fun. For example, he was friends and worked with investor Charlie Munger for more than half a century. Together they created a unique investment style based on mutual respect and humor.
• Be grateful and generous– money is a powerful tool for helping others. Warren Buffett, along with Bill Gates, launched the Giving Pledge in 2010, where 40 of America’s richest people pledged to give away some of their wealth to help solve some of society’s most pressing problems. As Warren Buffett likes to say, “I’m not happy because I’m rich. I’m rich because I’m happy.”
• Think decades ahead– it is better to avoid short-term decisions that may give immediate results, but harm in the long term. Buffett chooses companies with a sustainable competitive advantage that protects them from competitors – brand , patents, low costs, network.

How does the advice to “think decades ahead” fit with the recognition of the volatility and often irrationality of the stock market and the need to always be prepared to change your plans? In fact, it is a direct consequence of the advice to carefully study the actual performance and condition of the company whose shares are put up for sale.

For example, Buffett once purchased shares in See’s Candies, a chocolate company with a loyal customer base and regional recognition. Although the business is small, it has consistently brought in profits for Buffett over the years.

And the idea of thinking decades ahead is fully compatible with the recommendation to follow the news. In 1988, Buffett bought 7% of Coca-Cola shares at $5 apiece. He assessed the long-term strength of the brand, the scale, the stability of demand, and the fact that a year earlier Coca-Cola had entered the USSR market with a population of almost 300 million, which at that time exceeded the population of the United States of 244 million people, and, accordingly, a virtually inexhaustible sales market.

Coca-Cola shares still give him profits today, but for this it was necessary to see in time and correctly assess the long-term turn in foreign policy and global reorganization. And not to be nervous about temporary difficulties and restrictions that companies were forced to comply with due to the announced sanctions. You can study Warren Buffett’s full investment portfolio of shares for the situation in 2025 today online .

And it’s worth saying a few words about the idea of patience and the ability to wait. This is not about passive waiting. It’s about being prepared for success and not getting flustered if the chance comes unexpectedly. Warren Buffett likes to say that when the sky starts raining gold, you need to have a bucket, not a thimble.

Sometimes the market, life or circumstances suddenly work in your favor. But if a person is not ready to take advantage of them, he will miss the chance. For example, a person has long wanted to invest, and suddenly the market falls, including shares of quite promising companies. It would seem that it is time to buy! But if a person does not have the knowledge, money, strategy, he will not take advantage of the chance.

Or a more traditional example for hired personnel. A person could be offered a promotion, but he is not mentally prepared, has not developed the necessary skills, has not received the necessary knowledge and education. Therefore, he has, so to speak, a “thimble” and not a “bucket”. Your “bucket” is your preparation:

• Knowledge– you know, you understand how finances, markets, your field work.
• Skills– you can do everything that people in your field should be able to do in your and your higher position.
• Money and other resources– you saved capital, time, energy.
• Thinking– You know you can handle new challenges and achieve success .

You need to be prepared for your “big opportunity” to come, even if it’s not clear when or how. Develop yourself, build a foundation. And when the chance comes, you won’t be confused, but will be ready to take full advantage of new opportunities.

So, what are these lessons of Warren Buffett that can be learned and used to develop intelligence? In fact, all the rules of Buffett considered can be considered as the very lessons that life itself taught him. Let’s summarize them.

What lessons can Warren Buffett teach?

Warren Buffett is known not only as an investor, but also as a person with outstanding analytical thinking, which, however, are closely related. He pays a lot of attention to learning, decision-making and critical thinking. So, what does he advise?

Read every day:

• Read books about business, psychology, history.
• Analyze annual reports of companies.
• Develop a habit of learning something new every day.

Buffett himself spends 5-6 hours a day reading. He says: “The more you learn, the more you earn.”

Learn to speak clearly and simply:

• Write down your thoughts as if you were explaining them to a child.
• Practice public speaking.
• Learn the logic of argumentation.

Buffett was once afraid of public speaking, but then he took a course with Dale Carnegie and learned to explain complex things in simple terms.

Critical Thinking and the “Circle of Competence”:

• Develop the skill of doubting and verifying information.
• Avoid making decisions based on emotions.
• Learn to recognize cognitive biases.

Let us clarify that cognitive distortions are regular errors in the perception of the surrounding reality. You can learn to recognize them and not succumb to their influence on our online course of the same name “ Cognitive distortions ”.

Make decisions slowly but surely:

• Think about the long-term consequences of decisions.
• Take your time – give yourself time to analyze.
• Evaluate alternative scenarios.

Buffett often analyzes companies for years before investing.

Learn from the best:

• Find mentorswho will help you grow.
• Read biographies of successful people.
• Analyze other people’s mistakes and successes.

Warren Buffett studied for many years with Benjamin Graham (the author of the concept of value investing) and did everything to get to work for him.

Avoid negative information noise:

• Stop mindless scrolling on social media.
• Focus on deep sources of knowledge.
• Learn to separate facts from emotions.

Buffett himself does not watch the news every hour, but concentrates on key information.

Invest in yourself:

• Develop skills that increase your value.
• Master financial literacy.
• Regularly analyze your successes and mistakes.

Buffett believes that “The best investment is an investment in your own knowledge.” It is difficult to disagree, especially since these investments will definitely pay off. At the very least, with more interesting work and more interesting pastime, for which the outlook is often more important than the money itself.

Yes, developing your intelligence requires discipline, reading, critical thinking, and the ability to learn from others, but as a result, you can become not just smarter, but also start making more informed decisions in your life and career. We invite you to our program ” Cognitive Science “, where you can pump up your thinking. And right now, we invite you to take a short test to assimilate the material: