Wealth wisdom of the day: ‘Rule No. 1: Never lose money. Rule No. 2...' – Warren Buffett’s advice for investors

Warren Buffett is often dubbed as the doyen of value investing, the ‘Oracle of Omaha’ and widely respected as an investing legend. Over the years, the Berkshire Hathaway Chairperson has given numerous pearls of wisdom, giving money rules that resonate with most of the investors globally.

The legend has always known to invest in companies that he understood after thorough research than just mindlessly putting money in. And this is something that Buffett has always tried to convey. The Berkshire Hathaway Chairperson is of the view that the most important quality for an investor is temperament, not intellect.

Among some of his most famous quotes is the number 1 rule to make money, which he had said nearly four decades ago in an interview.

Wealth wisdom of the day by Warren Buffett: ‘Rule No. 1: Never lose money. Rule No. 2...'

Buffet had sometime around in the late 80s famously stated that, "Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1," while talking about the key rules of investment. In the interview, he explained that “if you buy things for far below what they are worth, and you buy a group of them, you basically don’t lose money.”

So, how can you apply the same when making any money-related or investment-related decisions?

Learn it from the master – Warren Buffett - himself. Berkshire Hathaway’s cash pile has now grown massively to a whopping $397 billion, breaking its own peak of $381.7 billion set in Q3 2025. Buffett’s firm ended Q1 of 2026 with this massive cash hoard, indicating that the move is rather deliberate.

You might wonder why. Buffett has long held on to a simple rule on whether the stock market is undervalued, fairly valued, or overvalued, which we now know as the ‘Buffett Indicator’. This indicates the value of the US stock market in terms of the size of the US economy.

Current estimates suggest that the Buffett Indicator is over 200%, which means that the US stock market is strongly overvalued relative to country’s GDP. Putting money in such a scenario could result in money loss, and this could be a reason why Buffett is holding on to so much cash now. While most people focus on potential gains only, smart ones have their eye first on potential losses, before they proceed.

Warren Buffett’s investment style

‘Oracle of Omaha’ Buffett’s investment style has been patient. He never chased quick returns and has always talked about the power of compounding. Warren Buffett once also credited compounding for almost all his financial success. "My life has been a product of compound interest. Nothing more. Nothing less. And nothing brilliant."

To simplify it better, he likened compounding to snowballing, where small but consistent efforts can yield big gains. He describes wealth compounding like a snowball rolling down a long hill. "Life is like a snowball. The important thing is finding wet snow and a really long hill," he once said.

Warren Buffett portfolio, latest investments

As per the 13F filing by Berkshire Hathaway on May 15, iPhone maker Apple continues to be the biggest holding, followed by American Express, Coca Cola, Bank of America, Chevron, Occidental Petroleum, Alphabet, Chubb, Moody’s, Kraft Heinz, among the biggest 10 holdings.