Warren Buffett has long been admired for his ability to simplify the complexities of investing. Unlike many on Wall Street who rely on complex financial models and forecasts, Buffett has built his fortune by understanding something much more fundamental—human behavior. His insights, shared during a 2007 Q&A session at the University of Georgia, remain as relevant today as ever.
Buffett reminds us that the best investment opportunities arise not from market trends but from human psychology.
“Attractive opportunities come from observing human behavior,” he explained. Investors often find themselves paralyzed by fear or euphoric with greed, and it is in these moments that fortunes are made. As he put it, “People make their own opportunities. They will be frozen by fear, excited by greed, and it doesn’t matter what their IQ, degrees, etc., is.”
The ability to remain emotionally detached is one of the most valuable skills an investor can develop. Buffett made his fortune by capitalizing on the moments when others were too fearful to act.
“The last 50 years weren’t unique. It’s just capitalizing on human behavior,” he said. “It’s people that make opportunities when others are frozen by fear or excited by greed. Human behavior allows for success if you are able to detach yourself emotionally.”
Buffett’s investment philosophy is grounded in patience, deep research, and a willingness to go where others are not looking. He recounted his early years in investing, where he methodically sifted through Moody’s stock manuals, uncovering hidden gems.
“I recently bought a copy of the 1951 Moody’s off of Amazon. On page 1433, there’s a stock you could have made some money on. The EPS was $29 and the price range was from $3-$21 per share,” he recalled. This meticulous approach to finding undervalued stocks—rather than chasing hype—has been a cornerstone of his success.
Buffett’s ability to identify value extended beyond U.S. markets. He described how, years later, he picked up an investment guide on Korean stocks and discovered remarkably undervalued opportunities.
“Look here at this company… Dae Han, I don’t know how you pronounce it, it’s a flour company. It earned 12,879 won previously. It currently had a book value of 200,000 won and was earning 18,000 won. It had traded as high as 43,000 and as low as 35,000 won. At the time, the current price was 40,000 or 2 times earnings. In 4 hours, I had found 20 companies like this.”
These opportunities, Buffett argued, are always present in the market. “The point is nobody is going to tell you about these companies. There are no broker reports on Dae Han Flour Company. When you invest like this, you will make money. Sure, 1 or 2 companies may turn out to be poor choices, but the others will more than make up for any losses. Not all of them will be good, but some will and those will make you rich.”
The Wall Street elite, Buffett noted, may be mathematically brilliant, but their reliance on complex models often blinds them to the simplicity of human nature. “The Wall Street analysts are brilliant people; they are better at math, but we know more about human nature.”
One of Buffett’s most striking examples of the risks of overconfidence in financial models was the collapse of Long-Term Capital Management (LTCM) in 1998. He recounted how even some of the brightest financial minds, including MIT graduates, nearly brought down the financial system by taking excessive risks.
“In 1998, the NY Fed offered 30-year treasury bonds yielding less than the 29½-year treasury bonds by 30 basis points. What happened was LTCM put a trade on at 10 basis points, and it was a crowded trade. They were 100% certain to make money, but they could not afford any hiccups. I know more about human nature; these were MIT grads, really smart guys, and they almost toppled the system with their highly leveraged trading.”
Buffett’s message is clear: understanding human psychology and remaining disciplined in your investments will always be more valuable than chasing the latest financial trend.
His words from nearly two decades ago continue to serve as a guiding principle for investors today: “These opportunities will be there in the next 30 years. You’ll have streaks where you’ll find some bad companies and a few times where you’ll make money with everything that you do.”
The wisdom of Warren Buffett is timeless. If history has shown us anything, it’s that markets change, economies evolve, but human behavior remains constant. Those who can stay rational while others panic—or get greedy—will always come out ahead.
You can read a transcript of the Q&A session here:
Warrren Buffett – University of Georgia Q&A Session 2007 (The Intelligent Investor Club)
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