Timeless Investment Lessons from a Legend

After the S&P 500, Nasdaq 100, and Dow 30 reached all-time highs in October, U.S stock markets experienced some increased volatility in November, led by questionably high AI-related stock valuations. At the end of 2022, when OpenAI released ChatGPT to the public, the S&P 500 was trading slightly above 4,000. At the end of November 2025, the S&P 500 traded at 6,849.09. The strong performance was mainly driven by a handful of large cap technology stocks. New questions about AI valuations arose rapidly in November including: Can the trillions of capital investment in AI-related projects (data centers, chip manufacturing, etc.) generate meaningful returns? Will AI continue to be dominated by a few players enjoying the “first mover” advantage? Will many of the AI driven stocks grow into their lofty valuations over time?

In unprecedented fashion, a slew of economic data was released in November, delayed from previous months due to the Federal government shutdown. When the Federal Reserve meets on December 9th and 10th to determine the future of monetary policy, several key topics will need to be addressed. One involves addressing the persistent headwinds impacting the trajectory of the inflation rate, which has remained stubbornly above the Fed’s target for several years. Second is the move higher in the unemployment rate, signaling a weakening trend in the labor market. Last is how the Fed has absorbed stale economic data in guiding future monetary policy decisions. As we look to 2026, we will continue assessing the incoming economic data in December, while paying close attention to the Fed’s guidance on monetary policy and the economy.

The Legacy of Warren Buffett

Legendary investor, Warren Buffett, announced his retirement from Berkshire Hathaway at age 95. This will mark the end of one of the longest, most successful tenures in modern portfolio and corporate history. What drove his successful run? Simply put, he bought “wonderful businesses” while paying fair prices.

As I read Buffett’s final letter to shareholders, a fundamental question kept playing in my head: If Buffett is considered one of the greatest long-term investors over the past 70 years, why don’t more investors try to replicate his investment philosophy and process? Let me shed light on some potential answers:

1. The simplest answer is that Buffett’s investment process requires rigorous research and analysis. It is well documented that Buffett spends 80% of his day reading.[1] His daily reading materials include newspapers, company filings (Annual Reports and 10-K’s), books, etc. Unless one has ample time to allocate to daily reading, learning, and analyzing, one is likely to fall short of the necessary due diligence needed to replicate Buffett’s success.
2. Even while many investors have long time horizons, there has been growing emphasis on instant gratification and short-term performance. The disconnect between short-term performance and long-term goals is often a consequence of the instant access to intraday investment results.  Achieving successful long-term results requires patience and tuning out short-term noise.  Buffett once said: “I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”
3. Broad U.S. equity markets have performed historically well over the past 15 years. Therefore, buying individual stocks of “wonderful businesses” has become a more lackluster model for long-term investing. Even Buffett himself stated in his 2013 annual letter: “My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.” That is an astonishing statement from someone who successfully built his business selecting individual companies and stocks to invest in.

Perhaps the only way to mirror Buffett’s success is by thoroughly analyzing a wide variety of companies, reading and researching most of the day, paying careful attention to price and valuation, and disregarding short-term price volatility. But that’s not the only way.

Lessons for Investors in Today’s Market

Whether investing in individual stocks, mutual funds, or Exchange Traded Funds (ETF’s), there are some fundamental lessons that can be drawn from Buffett’s remarkable long-term track record.

1. Price matters.

“Price is what you pay, value is what you get.” – Warren Buffett

Successful long-term investing in any asset class requires a measurement of investment value and determining a fair price for that value with any associated risks. Whether one acquires real estate, a small business, a stock, or a bond, it is important to ask oneself: What value am I receiving for the price I am paying?

Prolonged bull markets often create an environment where many investors fail to connect price with value. This is often exhibited for assets trading on positive momentum (even with highly uncertain future cash flows) which can appear attractive on the false premise that stock prices can only rise. But not even Buffet would have been able to build sustainable long-term wealth by picking winning momentum trades.

2. Historically, the best time to buy is when markets are down.

“Be fearful when others are greedy and greedy when others are fearful.” – Warren Buffett

Buying high-quality assets when they were out of favor was a key ingredient leading to Buffett’s remarkable success. This is because, as an asset becomes cheaper (all else equal), it becomes a less risky, long-term investment with greater return potential. It is human nature to reflexively sell when assets move lower — especially during a sharp market selloff — fearing the asset will continue its downward trajectory. But investors with long time horizons may be best served by increasing their allocation to stocks when others are selling.

3. Long-term defense always trumps offense.

“The first rule of investment is don’t lose money. And if you ask about the second rule? Don’t forget the first.” – Warren Buffett

In other words, you need to stay in the game to keep playing. Many years ago, we had a client who decided to liquidate his successfully growing managed portfolio to invest in a risky private business. The business ultimately failed, leaving his financial condition in disarray. By failing to exercise discipline, he fell out of the game. With the various available techniques for playing defense—including diversification, buying undervalued assets, and monitoring investment quality—one can adequately prepare for adverse market events to help ensure one maintains the integrity of one’s financial plan.

Buffett’s Final Lesson

One of the last few sentences in Buffet’s letter that he shared publicly was that “when you help someone in any of thousands of ways, you help the world. Kindness is costless but also priceless.” In other words, charity can come in many forms, even for those without the resources to give financially.

We encourage anyone with charitable goals to reach out. We can assist you in developing a tax-efficient plan to help achieve those goals. Should you wish to discuss effective charitable giving before the end of the year, please reach out to me at [email protected] to schedule a call.

This newsletter is provided for informational and educational purposes only and should not be construed as individualized advice or a recommendation of any kind. Individuals should consult their own financial, legal, or tax professional regarding their specific circumstances and needs.            

Any forward-looking statements or opinions are based on current market conditions and expectations, which are subject to change and may not occur. The information provided is believed to be reliable, but its accuracy, timeliness, or completeness cannot be guaranteed. It is provided “as is,” without any express or implied warranties.

There is no assurance that any investment, plan, or strategy will be successful. Diversification does not guarantee profit or protect against loss in a declining market. Investing involves risk, including the potential loss of principal. Past performance is not indicative of future results.

Investment Advisory Services are offered through Mariner Independent Advisor Network (MIAN), an SEC-registered investment adviser. Caplan Capital and MIAN are not affiliated entities. Registration of an investment adviser does not imply any level of skill or training.