During his European tour last week, Warren Buffett held four news conferences in four days and answered a lot of questions.

While a few of his answers generated headlines, most did not.

There was, however, one answer in Madrid that stood out to me as I listened to all those questions and answers in a variety of languages.

It's not new, so it's not news.  But this one, brief, answer is essential to understanding how Warren Buffett has been so incredibly successful with his investments over the decades.

Buffett was asked to name the most important lesson he learned from his mentor, Benjamin Graham.

Instead he listed three, using just 85 seconds to deftly describe the trio of "bedrock" ideas that have helped make him the world's richest man.

It all comes from this ....

Warren Buffett:  The three most important lessons I learned were all from the same book, The Intelligent Investor.  It was written first by in 1949.  They appear in chapters 8 and chapters 20. 

The first is, to look at stocks as pieces of businesses, not as little items on a chart that move around, not as ticker symbols, not as something that might split next week or next month or something of the sort.  But, rather, to look at the business, value the business, divide by the shares outstanding, and decide whether you really want to own a piece of that business at that price.

The second one was his commentary about your attitude toward the stock market.  That it is there to serve you rather than to instruct you, and he used the famous Mr. Market example of that.  That attitude is fundamental to making money in stocks over time.

And the final item he talked about was margin of safety.  When you buy a stock that you think is worth 10 dollars, you don't pay $9.95 for it, because you can't be that precise in estimating its value.  So you leave a considerable margin of safety for both what you don't understand and for the vagaries of the future.

And those three ideas, which I learned when I was 19 years old, have been the bedrock of everything I've done since.

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