During this interview with Charlie Rose, Warren Buffett describes his early fascination with stock trading, starting at age 11. Initially, he focused on predicting stock price movements using technical analysis and charts, immersing himself in books like Edwards and McGee.
For years, he believed success depended on forecasting the stock market. However, at 19 or 20, after reading Benjamin Graham’s The Intelligent Investor, Buffett realized his approach was flawed.
He shifted his mindset to focus on buying businesses rather than stocks, valuing long-term ownership over short-term market fluctuations. This pivotal change in perspective shaped his investment philosophy and led to his remarkable success.
Here’s an excerpt from the interview:
Buffett: That’s— but when I was— when I was 11, I picked stocks. I had the whole wrong idea. I, uh, I was interested in watching stocks, and I thought stocks were things that went up and down.
And I charted them. I read books on technical analysis. I read— I read Edwards and McGee; I think that was the classic then. I mean, hundreds and hundreds of pages, and I read that whole thing over and over again. I read Garfield. I lost it. I read everything.
And I thought, the first eight years, I thought the important thing was to predict what a stock would do and predict the stock market.
And then I read Ben Graham, you know, when I was 19 or 20. And I realized that I was doing it exactly the wrong way. But it didn’t hurt that I had that background and everything, and I re-jiggered my mind.
And when I read the book The Intelligent Investor, at that point, I never bought another stock. I bought businesses that happened to be publicly traded.
But I became an owner of a business, and I did not care whether a stock went up or down the next day, or the next week, or the next month, or the next year.
And I didn’t have any idea what it would do. I didn’t know what the stock market would do, but I knew businesses. I knew some businesses.
You can watch the entire discussion here:
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