Warren Buffett’s decades-long track record of beating Wall Street is rooted not just in financial strategy but in an unusual discipline: avoiding distractions. The Berkshire Hathaway (NYSE:BRK, BRK.B)) chair and CEO said his success stems from a firm belief that investors focus too much on short-term events.
During the 2009 Berkshire Hathaway shareholders meeting, Buffett recalled a pivotal moment in his life: a stop in Las Vegas in 1952. He and his wife, Susie, had just married and were driving west when they visited the Flamingo Hotel. What he saw there would shape his views for a lifetime.
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“I looked around and saw all these well-dressed people who had come, in some cases, from thousands of miles away,” Buffett said. “This was before jets, so transportation wasn’t as good. They’d gone to great lengths to do something that every damn one of them knew was mathematically dumb.”
Buffett observed the gambling crowd and quickly recognized a truth that would later fuel his investment philosophy: irrational behavior creates opportunity. He turned to Susie and said, “We are going to make a lot of money.”
At Berkshire Hathaway’s 2019 shareholders meeting, Buffett revisited the Vegas story with more emphasis. “If people are going to get on a plane in New York and fly a couple thousand miles to stand there and do things with a mathematical expectation that’s negative on every action they take, that is a world of opportunity,” he said.
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His strategy includes tuning out digital noise. He does not use a smartphone and avoids checking email frequently. He told CNBC in December 2018 that doing so keeps him focused and immune to what he called “breathless commentary” on business news programs.
In his 2017 shareholder letter, Buffett wrote, “Your mind may well be rattled by scary headlines … and an unsettled mind will not make good decisions.”
That mindset has paid off. Since the May 2010, “flash crash,” when the Dow Jones Industrial Average fell more than 9% in 30 minutes, the index has surged approximately 270%. Over the same period, Berkshire Hathaway shares have gained more than 560%.