Why Buffett’s Blueprint To Investing Is Hard To Follow
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One of the hardest parts about investing is knowing which stocks to buy. That’s especially true today, when there’s no shortage of opportunities being shoved in your face.
Fortunately, when it comes to figuring out which of those are actually worth exploring—and which ones you’re better off ignoring—Buffett and Munger have given us a North Star to follow. Their timeless principles distill investing down to its most basic element and offer something most investors struggle to find: a real sense of direction.
In Buffett’s annual letters to shareholders—which I truly think are must-reads for any investor—he lays out this framework again and again. One of the clearest examples comes from the 1977 letter:
“We select our marketable equity securities in much the same way we would evaluate a business for acquisition in its entirety. We want the business to be (1) one that we can understand, (2) with favorable long-term prospects, (3) operated by honest and competent people, and (4) available at a very attractive price.”
It really couldn’t be any clearer, but put slightly differently: buy companies you understand, that are likely to grow for a long time, and don’t overpay for them. That’s the blueprint.
Warren comes back to this idea pretty regularly in the annual letters. In 1991, for example, he writes:
“If my universe of business possibilities was limited, say, to private companies in Omaha, I would, first, try to assess the long-term economic characteristics of each business; second, assess the quality of the people in charge of running it; and, third, try to buy into a few of the best operations at a sensible price.”
When he says it, it sounds so simple. Maybe to him, it is.
But for the rest of us—including myself—knowing what to buy is only half the battle. Putting it into practice for decades on end is even more difficult, especially when there’s always a hot new stock or ETF begging for your attention.
It seems like every day brings a new distraction. A new reason to stray from Buffett’s blueprint. And that’s where most investors get tripped up—not because they lack the knowledge, but because it’s hard to unfailingly follow through on it.
The fact of the matter is: while Warren’s way of doing things sounds sensible and clearly works, it just isn’t exciting enough for many people. They think: why hold on to Proctor and Gamble (PG) when everyone else is printing cash with Palantir (PLTR)?
And I get it…Buffett’s approach is slow and methodical, and it requires years of consistent compounding for it to grow into something meaningful. But it’s also built to last—and it forces you to think like a business owner, not a stock trader.
Think of it this way: when you follow his blueprint, you’re building your house on a foundation of rock. When you chase trends and reach for the most amount of gains (or income) in the least amount of time, by whatever means necessary, you’re building on a foundation of sand.
And the thing is, both foundations seem fine until the storm comes, which makes me wonder: If you had to describe the foundation of your investing approach right now—would it be more rock, or more sand? Write to me here and let me know.
And if you want to learn about a rock-solid, 10-stock dividend portfolio that I recently put together, check out this video here.
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IN MY PORTFOLIO 📈
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ICYMI 🎥
Our WORST Performing Stocks | Ep. 19
In this episode of The Deep End, Ari and I talk about our worst performing stocks and why many people are afraid to start investing.
CAREFULLY CURATED 🔍
📺 Too Boring? - One of the biggest complaints people have about dividend investing is that it feels too slow and too boring—there’s just not enough action or excitement to keep them interested. But in the world of investing, boring is often exactly what you want. The Dividend Diplomats did a great job breaking down why that is in this video.
🎧 The Compounder's Element - We say it all the time: time is the most important variable in the investing equation. And in this episode of Investing By The Books, Laurence Endersen—author of The Compounder’s Element—does a great job explaining exactly why that is.
📚 Zoetis: The Big Drop - Zoetis fell more than 5% on the day it reported Q1 2025 earnings—even though it beat expectations across the board. So what happened, and was the sell-off justified? This article takes a closer look.
SINCE YOU ASKED 💬
"From your experience, what excuses are most used by people to not invest?"
- Jake | Email
This could honestly be an entire newsletter on its own—but if I had to narrow it down, a couple of things stand out to me.
First, I think there’s just a lack of awareness. A lot of people don't even know what stocks actually are and think the market is just a bunch of numbers on a screen that randomly move up and down with no real logic behind them.
Admittedly—and we've all experienced it—it can be like that sometimes. But what many people don’t realize is that when you buy a stock, you’re actually buying ownership in a real, living, breathing business.
The people who don't realize that are hesitant to put their money into something they don’t fully understand, which is understandable. When something feels so abstract and unpredictable, it's easier to write it off as something not to take part in.
Second, a lot of people just have other things they’d rather spend their money on—which should come as no surprise.
Investing seems boring to so many people, especially young people who—unbeknownst to them—would benefit the most from starting to invest at their age. And for these same people, retirement feels like it’s a lifetime away, so setting aside money for it doesn’t feel urgent.
Because it's not urgent (until it is), and because the benefits of investing only become tangible with time, it’s easy to prioritize spending money on things that will pacify the present you in the short term over the "boring" assets that your future self is begging you to buy.
With that said, Ari and I actually talked about this in last week’s episode of The Deep End, and he made a really interesting point that ties all of this together. He said that when it comes down to it, every excuse—whether it’s “I don’t have the money to invest,” “I don’t know what to buy,” or anything else—can usually be traced back to one root cause: fear.
It's the fear of making a mistake. Fear of losing money. Fear of sacrificing something you want today for the betterment of tomorrow.
Even the excuse of not having enough money to invest is rooted in the fear that giving up spending on something you want now will make life less enjoyable. So we rationalize it and repackage the fear into something that sounds more reasonable or practical.
If we’re really being honest, though, fear is the biggest barrier that keeps people from investing. It just surfaces in different ways.
Have a question? Ask me here to see it featured in an upcoming newsletter.
LAST WORD 👋
In last week’s newsletter, I wrote about master limited partnerships (MLPs) and pointed out a few important tax issues you’ll want to understand before adding them to your portfolio.
Well…I accidentally linked to the wrong website. Sorry about that!
Here’s the correct link I meant to include—it walks you through everything you need to know about how MLPs are taxed.
