Tips that Warren Buffett and Elon Musk agree on
Warren Buffett and Elon Musk may be two of the most dissimilar billionaires on Earth. Musk is an outspoken and cutting-edge entrepreneur in the tech world while Buffett is mild-mannered, full of folksy wisdom, and what some would even call “old fashioned.” Although their personalities and investment styles seem at odds, the truth is that when you take a closer look, Buffett and Musk espouse many of the same ideas when it comes to investing advice.
If two of the richest people in the world agree on how to invest, perhaps it’s worth listening to what they have to say. Here are three principles Buffett and Musk agree on when it comes to investing.
Buy What You Know
The investment advice Buffett is perhaps best known for is that you should buy what you know. This has famously kept Buffett out of some of the more popular areas of the market, such as technology, while he focuses on the industries he feels he knows well, such as energy, consumer products and financial services.
His biggest position is currently Apple, but Buffett views it as a consumer products company rather than a tech firm. According to Buffett, more people would give up their second car than an iPhone, and the firm’s loyalty makes it a winner, more than even its technology.
Elon Musk may “know” different types of stocks, but he shares the same investing philosophy. In May 2022, Musk tweeted, “Since I’ve been asked a lot: Buy stock in several companies that make products and services that you believe in.” In other words, buy what you know.
Hold for the Long Run
Equally important in the Buffett philosophy is that you should buy and hold stocks for the long run. Buffett famously told his shareholders in his 1988 letter that his “favorite holding period is forever.”
He emphasized that idea with his comment to CNBC in 2008 that “if you don’t feel comfortable owning a stock for 10 years, you shouldn’t own it for 10 minutes.” Buffett puts his money where his mouth is, owning positions like Coca-Cola and American Express for more than 20 years in the Berkshire Hathaway equity portfolio.
Elon Musk agrees with this philosophy as well. In the same May 2022 tweet about investing, Musk continued by saying that after buying stocks you believe in, you should “only sell if you think their products and services are trending worse.”
“Be Greedy When Others Are Fearful, and Fearful When Others Are Greedy”
The ever-quotable Warren Buffett came up with another gem when he gave the world his famous line, “Be greedy when others are fearful, and fearful when others are greedy.” What Buffett means by this simple saying is that you should be picking up shares in your favorite investments when people are panicking and selling them at rock-bottom prices.
You should be a seller when people are overpaying for the investments you own. This idea makes for a good one-two punch when coupled with a long-term investment strategy, as you can actually take advantage of bear markets by adding to your positions at lower prices and simply wait for them to recover.
Musk is on board with this strategy as well. While perhaps not as pithy as Buffett’s’ version, Musk once tweeted, “Don’t panic when the market does. This will serve you well in the long run.”
Where Do the Billionaires Disagree?
Of course, Buffett and Musk aren’t entirely in lockstep when it comes to investing. Their most notable difference is in the world of cryptocurrency, which Buffett loathes and Musk loves. Buffett has said that Bitcoin is “probably rat poison squared,” whereas Musk “still own[s] and won’t sell my Bitcoin, Ethereum and Doge.”
Buffett actually went much further during Berkshire Hathaway’s 2018 annual meeting, stating that trading in cryptocurrencies “is just dementia.” This followed up his comments to CNBC in January 2018, when he said, “In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending.”
In Musk’s defense, the billionaire can actually afford to lose money on his cryptocurrency, if that is the case, and he never said that people should follow his investment practices. In fact, during a May 2023 virtual appearance at The Wall Street Journal’s CEO Council Summit in London, Musk said, “I’m not advising anyone to buy crypto or bet the farm on dogecoin. Maybe you should, but let me advise you that would be perhaps unwise.”