In this week’s episode of Retire in Texas, Darryl Lyons, CEO and Co-Founder of PAX Financial Group, reflects on the life, legacy, and investing philosophy of Warren Buffett in light of his upcoming transition from CEO of Berkshire Hathaway. At 94 years old, Buffett’s influence on the world of finance spans generations – and in this thoughtful episode, Darryl shares not only Buffett’s remarkable accomplishments, but also the lessons that everyday investors can learn from his unique approach.
Darryl unpacks Buffett’s investing style, personal quirks, and lesser-known decisions, while offering insight into how value investing has evolved – and where it may still hold relevance in a fast-moving, AI-driven market.
Key highlights of the episode include:
• What really made Warren Buffett successful – and why focus, brilliance, and longevity matter.
• The origins of Berkshire Hathaway and how it became a powerhouse holding company.
• Why Buffett’s love of insurance companies fueled many of his smartest investments.
• The difference between value and growth investing – and where you may fit.
• How Buffett’s famous quotes reflect deeper truths about risk, reputation, and success.
From reflections on Buffett’s personal life and ethics to the power of focus and time, this episode invites listeners to think more intentionally about their financial lives – and to consider how long-term thinking, not short-term wins, truly builds wealth and wisdom.
For more insights or to connect with a PAX Financial Group advisor, visit http://www.PAXFinancialGroup.com.
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Transcript:
Hey, this is Darryl Lyons, CEO and Co-Founder of PAX Financial Group. And you’re listening to Retire in Texas. This information is general in nature only. It’s not intended to provide specific investment, tax, or legal advice. Visit PAXFinancialGroup.com for more information, visit PAXFinancialGroup.com. You can click on the upper right-hand corner.
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Okay. So, I want to talk about Warren Buffet. And the reason I want to talk about Warren Buffett is because he just announced that he’s going to step down as CEO of Berkshire Hathaway at the end of this year and handing the leadership to Greg Abel. Warren Buffett is 94 years old. And this has been masterfully planned over well over a decade.
And I just thought I’d have some musings about Warren Buffett that I thought might be helpful for you, because many of us know of Warren Buffett, but we don’t know much about him. So, I thought I’d share a little bit about what I know about Warren Buffett. And some thoughts, and how I think about some of the things that he’s said and done and how it impacts me even today. At the very end, I want to give you some perspective that, so I want you to hang out to the very end because there’s perspective.
I think that’s important. Regarding Warren Buffett, Warren Buffett is so successful for primarily three reasons. One, he was extremely focused at a very, very young age. And I’ll get into a little bit of how I see that, we all saw that play out, but very, very focused. Two he was brilliant. He had a photographic memory, very, extremely smart, gifted academically when he applied himself, there were moments in his life where he really didn’t apply himself, but when he did, he was a brilliant man.
And then three longevity. He just stuck it out. You know, I like football as some you guys might know. And you think about it, sometimes they ask people who’s the greatest running back of all time. And sometimes, not all the time Emmitt Smith comes up. But you got to give them credit because Emmitt Smith played a long time and Tim Duncan played a long time.
And that’s what made some of these athletes that were around a long time great. And that’s what makes Warren Buffett great. He was not a perfect man. He’s not somebody that I personally worship. Frankly, he’s not even a role model to me. I think there’s just a lot of interesting things about him, and the way he applied business.
But, no, not a role model for me personally. For other people, maybe. But I know I’ll share a little bit about why I feel that way. But we also have to ask ourselves, what is Berkshire Hathaway like? We’ve heard about this Berkshire Hathaway. What is it? Well, maybe you haven’t. Berkshire Hathaway was actually, it was called Hathaway Manufacturing.
And that was in Massachusetts founded, believe it or not, 1888, it was a cotton mill. And, you know, textile mill. And in the 60s, I think 65, Warren Buffett seized control of it because of, you know, the operational inefficiencies. He just made a business out of it, real business, a business that was just struggling along. And Warren Buffett came in, and this is what he does, is he goes and finds businesses that are struggling and he turns them around.
That’s not always the case. But in this case, it was, now the textile business had some cash flow and that helped fund some deals. What’s interesting, I think you got to think about and give credit to Warren Buffett, had any of us, let me let me say it this way. First of all, Berkshire Hathaway is no longer a textile mill.
It is a company that that is the holder of all of his companies. And so most of us would have said, okay, Berkshire Hathaway, the name is no longer relevant. So we’re going to change it to like Buffett Holdings or Buffett Conglomerate. And he did none of that. He just like kept the name Berkshire Hathaway, a little bit confusing because it’s not like traditional Wall Street names, but he kept it.
And I find that interesting. I find that to be kind of right in his lane. He was a peculiar guy that way. But yeah, he ended up and the textile mill is no longer in existence. But it is. It now represents his holding company, which, if you look at the spider web of his holding companies, Berkshire owns this.
And, that company owns this, and Buffett owns a percent of this. It’s a huge spider web. In fact, one time he got in trouble with the SEC because they’re trying to figure out if he was, you know, laundering money. There’s a good book on Buffett that if you want to get into him, it’s called Snowball.
I love, love that book. It was a great book. It is a very thick book. This sounds really nerdy, but in my 20s, my buddy got married, went to Vegas. We hung out and then at a certain point in the night, I was like, guys, you guys hang out later, I’m going to go back to the room and go to sleep because there’s a certain time in Vegas.
Nothing good happens after that time. Usually it’s probably noon, but I went back to bed and I got up, like, at 5 a.m., and I go and I grab a cup of coffee and I get this Warren Buffett book, and I’m just diving in and reading it. And here comes a group of guys, bright and early, [5:00] from a long night out.
And, they gave me an extremely hard time reading a book in Vegas at 5 a.m.. So, that’s what I think about whenever I think about the book Snowball, which, again, was a good book. And I do meet with a lot of investment managers. So this is an interesting tangential thing, who I’ve met so many who look at me and say, yeah, I’m an investor, I’m a Warren Buffett type of investor, and I almost roll my eyes because like, what they’re saying is that they’re saying and again, they’re saying that they’ve got this incredible photographic memory, an extreme focus and longevity.
And what I think they’re saying is that they buy stocks at a cheap price. And that’s called value investment. It was actually originally started by a guy named Benjamin Graham, which I’ll get to in just a second because he has a connection with Warren Buffett. But Warren Buffett was a value investor. And value investment means that you buy companies that are on sale that for some reason, you find that the price of the stock is less than really what it’s worth.
Most of us in the marketplace believe that the markets are what we call efficient, that there’s no way to find an edge, because there’s a ton of smart people. Everyone’s so smart on Wall Street that intelligence basically offsets itself. But there are, like Benjamin Graham and Warren Buffett that say, you know, you can find anomalies.
You can find areas where there’s a disconnect. And they do. I would suggest to you, they do exist in certain spaces, namely international, small cap stocks. But in those very, very large companies, it’s hard to find those disconnects. But Warren Buffett spent the majority of his life looking for those dislocations. And I would suggest even decades ago is even easier.
But with the internet today, gosh, even myself can see real time, the health of a financial company. But for decades, Warren Buffett was brilliant at finding these dislocations. And that’s called value investing. In fact, if you look in some of your portfolios, you can see like a value fund or value strategy. We’ve used value strategies for a long time.
They haven’t done well over the last decade, and frankly, Buffett hasn’t done as well in the last decade. Doesn’t discount what he’s done in the three decades before that. But in the past decade, this type of approach of investing hasn’t done real well. And I say real well. It hasn’t done well relative to a lot of the growth types of investing, the Nvidias, and the AI stuff.
So, Buffett has underperformed artificial intelligence, but he doesn’t care. You know, not he doesn’t care, from perspective because he’s so rich. He just owns good companies and the companies do what they’re supposed to do. And, you know, he got this start really early in this way of thinking. You know, when he first started hustling, he was selling maps.
And then, he actually, I’ll even go back to his childhood. He was hustling, selling, like, bottle caps. He collected bottle caps, selling stamps. He would sell golf balls. He had a paper route. He had gotten the premier paper route. I mean, he was an absolute hustler. Not in a negative sense, an absolute hustler. But when he became an adult, he started selling maps.
And then that’s insurance companies use maps for part of their risk management. I think it’s probably about that time you start really looking at insurance companies and really scratching his head, because insurance companies are really interesting investments, because if you own an insurance company, and we all hate insurance because we pay it, you pay this premium. And yes, some of the premium goes to overhead cost, but a big chunk of it just goes in the coffers.
And then you get to invest that money. And that’s what Warren Buffett did. He bought insurance companies because their reserves were so big that he could go and invest it. And he loved doing that. And one of his big ones was Geico. I don’t know if you knew that Geico was one of his real big companies that he bought.
He also bought, it was a mobile home company. Clayton Homes, yes. And I say that because I always think about that company, because there was a time that my dad was in that business, and I always thought, because I was keenly aware of what was going on in that business. I never thought it was a manufactured home business.
And when I read The Snowball, I was like, why did Warren Buffett own it? Because it was an insurance business. In the financing business, the majority of the people that were purchasing homes, the margin wasn’t on the fabricated mobile home. The margin was on these extremely expensive insurance policies and extremely expensive financing. That was where the money was at.
So, he loved the insurance business. That’s where he made a ton of money, but he made money on a lot of stuff. He made money on Disney and, one time he owned a bunch of silver and Coca-Cola, Washington Post, ABC. I mean, he just owned really good companies. And again, his strategy was value investing,
But he said he called it cigar butt investing. Buy companies that were so cheap that nobody wanted them. But there’s still a few puffs left in them. So he was really just this premier value investor that learned at Columbia because he didn’t make it into Harvard. Because I think, as I understand it, he had his interview at Harvard and he was so arrogant.
This is me just kind of reading between the lines that Harvard declined the invitation. So, he went to Columbia. I’m sure Harvard’s endowment regrets that, but he went to Columbia, met the guy, Benjamin Graham, who is like the Obi-Wan Kenobi of this story. And that’s when he taught him about value investing. And he would say something like, it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
So, I love to think about that a lot, too, whenever we look at the market as a whole. But I would not say I’m a Warren Buffett follower. I just say I’ve gleaned a lot from his principles of investing. He also had a friend that you might have heard of that passed away that was really helpful in a partner.
His name is Charlie Munger. He was a lawyer and a few years older than him, I think, about six years older than him and grew up in his area that did some business with him, you know, flipped a company, Windmill Company, got a lot of people mad because he let a lot of people off in this little town called Beatrice.
So, they navigated through that together, and Munger had a little different take on investing. And his take was to look for sales growth and good management and research and development. And I think that’s interesting, too, because if you see a lot of Buffett’s work over the years, it was value investing. But he did pay a lot of attention to the leadership.
And you’ve heard me say this over and over again. Everything rises and falls in leadership. But I just want to juxtapose his value style investing, maybe even ask yourself if that resonates with you. So, his style would be buy companies, not buy stocks. And you’ve heard me say this thousands of times, and this may be a little bit Warren Buffettish for me.
He was never a stock buyer. He was buying good companies. The stock was just semantics. He was always thinking about buying good companies at a fair price. And then incorporating into that modeling was good leadership and good management. The contrarian, I wouldn’t say the alternative to that, which to me presents much more risk.
And, I don’t know, it just mechanically doesn’t, we actually own it and we use it in our portfolios. But if I had a preference of more of the value guy and good management, but there’s a lot of people that like the growth investing, which is what we see today in artificial intelligence, which is the anticipation of a future opportunity that’s really nebulous, that’s speculative.
A lot of people like that, and I think it’s probably good for you, but that’s not Warren Buffett’s game. He likes to know what he’s getting into. And, you know, it’s worked for him. It has, with the exception of a few years, the last ten years. But, you know, his value system was certainly different than, what I would, you know, my value system, I use mine like, for example, he likes the cigarette business. He says it costs a penny to make, and you sell it for a dollar. It’s addictive. And there’s a fantastic brand loyalty. That was quoted in The Barbarians At the Gate. I never read that book, but it’s one.
It’s on my list. The fall of RJR Nabisco. I’m surprised I haven’t read it. Frankly, I think about it all the time, but, yeah. Cigarette business. I don’t know if I’d be excited about the cigarette business. The other thing is that he was more married to his business in his family. And so, there’s a lot of fallout from that.
And I was tell somebody the other day, I was telling Christy. I said, that’ll never happen to me. I make my family a priority, and I always will. So that’s different. And then, one of his, you know, we always have a problem to solve. And that’s kind of put in our heart by God. And, you know, I really sincerely for me, you know, want to see everyone believe in a bigger life.
And I do think that’s found in our creator. If you talked about Buffett’s big problem to solve, I don’t know which is number one problem that he’d solve, maybe poverty, but one of them was population growth. And if you think about if that’s your big problem to solve, there are severe indirect consequences of playing God. And I know that he put money in certain places that I would disagree with, with the intent of trying to maintain population control.
That’s the bad side of Buffett. I hate to say anything bad about anybody in general, but this is all public information. I think overall, from an investment perspective, he was absolutely brilliant. How he treated his employees, investors. I really don’t know. There’s different stories out there. But he had some great quotes and great strategies of investing that I think are very applicable today.
I’ll share some of those with you. “When there’s blood on the streets, buy, especially if it’s yours.” Let’s see, what’s another one? “Sell when others are greedy and buy when others are fearful.” That was one that he used a lot. This is a good one.
And this is one I’m going to start adopting this one here, “Lose money for the firm, and I will be understanding, lose a shred of reputation for the firm, and I will be ruthless.” Wow, his risk management strategy was “Number one. Don’t lose money. And number two, don’t forget number one.” I love the story of him and Bill Gates getting in a room over dinner.
And Buffett was a big, cherry cola fan. Maybe Diet Coke, but I think it’s cherry cola. And they got in a room and had dinner together, and they asked them to agree on what was the one most important thing that made them successful. And I love the answer to this. This is so powerful. And it was focus.
That’s huge. So just think about that for a second. The last thing I’d say to this, I told you I’d kind of leave you with something that made me think a little bit. Warren Buffett’s 94 years old, sixth richest person in the world, who used to be the richest, now the sixth richest. And I think he trades places with you because you have something that he doesn’t.
And that’s time. And it really made me think about that. I mean, would you trade places and have billions knowing that your days are numbered? I mean, all our days are numbered, but he’s 94.
So, it’s absolutely wonderful to study rich people and Warren Buffett being one of the richest in the entire world. But I think we would all agree that our memories and our time are much more important than our wealth. Remember, you think different when you think long term. Have a great day.
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