Power Players

Warren Buffett's advice for investors is to 'never listen to people like me'

Warren Buffett, Chairman and CEO of Berkshire Hathaway.
David A. Grogan | CNBC

Billionaire Warren Buffett is one of the most respected investors in history, thanks to a track record that's seen him regularly make stellar returns over several decades.

Buffett would seem to be exactly the type of expert you should look to for investing tips. But when he was asked to name some of the biggest investing mistakes he sees people make, the "Oracle of Omaha" recently told Yahoo Finance that anyone looking for investment advice should "never listen to people like me."

Of course, the 88-year-old billionaire might have been delivering a slightly cheeky response. But more than that, Buffett is basically suggesting that investors should generally be wary of being too reactionary.

"Never listen to people like me, or read the papers, or do anything subsequently," Buffett told Yahoo Finance in an interview published on Saturday. 

Buffett has indicated in the past that investors shouldn't always trust financial forecasts and predictions because he says it's usually not safe to listen to anyone who suggests they know which way the financial market winds are going to blow.

"I don't pay any attention to what economists say, frankly… " he said in 2016. "If you look at the whole history of [economists], they don't make a lot of money buying and selling stocks, but people who buy and sell stocks listen to them. I have a little trouble with that," Buffett added.

Of course, Buffett does have wisdom to offer, and he says his investing advice is to simply "buy a cross-section of America" and, above all, be patient, he tells Yahoo Finance. In other words, diversify your investments by buying stocks in companies across a wide spectrum of industries that make up the US economy, rather than only buying tech or retail stocks, for example.

"You want to spread the risk as far as the specific companies you're in by owning a diversified group, and you diversify over time by buying this month, next month, the year after, the year after, the year after," Buffett told CNBC's "Squawk Box" in 2017.

But Buffett also makes it clear that he thinks a good investor always plays the long game.

"Moving around is not smart in investing," Buffett tells Yahoo Finance, adding that many investors make the mistake of constantly buying and selling stocks, rather than holding onto their investments to give them time to mature and potentially make more money over time.

The most surprising facts about Warren Buffett before he became a billionaire
The most surprising facts about Warren Buffett before he became a billionaire

Of course, Buffett is famous for being a long-term investor who believes in holding onto his investments for years to maximize their value. That's because the stock market always comes with a certain amount of volatility, and your stocks' prices will generally rise and dip frequently from day to day. So it's important not to get too wrapped up in the latest short-term market fluctuations, Buffett says.

"Some people should not own stocks at all because they just get too upset with price fluctuations," Buffett told "Squawk Box" in February 2018. "If you're gonna do dumb things because your stock goes down, you shouldn't own a stock at all."

Ultimately, Buffett says, if you hold on to a diverse selection of stocks for long enough, then the market should eventually trend upward. "I know what markets are going to do over a long period of time: They're going to go up. But in terms of what's going to happen in a day or a week or a month or a year even, I've never felt that I knew it and I've never felt that was important," Buffett told CNBC's Becky Quick in 2016.

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This 25-year-old learned a tough business lesson from Warren Buffett
This 25-year-old learned a tough business lesson from Warren Buffett