Warren Buffett’s 3 investing rules still hold true — especially in today’s volatile market
October 12, 2025
A year after markets adjusted to a series of Bank of Canada rate cuts and renewed investor optimism, Warren Buffett’s advice on patience, simplicity, and consistency feels more relevant than ever. Investor’s and those who watch Berkshire Hathaway’s annual meetings know this as, quite often, the firm’s famous CEO is asked some critical questions. However, one investor who attended the conference in 1999 cut right to the chase. “Mr. Buffett, how do I make US$30 billion?” he asked (1).
As always, the Oracle of Omaha conveyed complicated theories in simple terms. Here are the three crucial rules that helped Buffett accumulate a massive fortune — and can help ordinary investors, too.
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Buffett’s best advice for investors is to get started as early as possible. He has a simple metaphor to explain his wealth-building strategy. “We started with a little snowball on top of a very tall hill,” he said. “We started at a very early age in rolling the snowball down, and of course, the nature of compound interest is that it behaves like a snowball.”
Indeed, the length of Buffett’s career is a key piece of his enormous wealth. He bought his first stock at the age of 11. Now past age 90, he is still actively investing. In fact, the majority of Buffett’s wealth was accumulated after he turned 65. In 1999, his net worth was just US$30 billion. As of October 2025, Buffett’s estimated net worth is more than US$130 billion, as per Bloomberg (2).
Staying invested over a long period of time is crucial. Ordinary investors can best harness the power of compounding by starting as early as possible.
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Buffett said that if he were starting again today with US$10,000, he would focus first on small businesses. “I probably would be focusing on smaller companies because I would be working with smaller sums and there’s more chance that something is overlooked in that arena,” he said at the shareholder meeting.
In his early days, the billionaire investor focused on extremely small companies that would be considered small-caps. He bought a tiny furniture company in Nebraska in 1983 when it was still expanding across state lines. He acquired See’s Candies when it made just US$4 million in annual profits in 1972. (The company is still privately held.)
These small businesses were overlooked and had more room to grow. That means Buffett had a chance to buy them cheap and watch them expand. This is also true in 2023, last year and at the tail-end of 2025. To put it in perspective, small cap stocks were roughly 30% cheaper than large cap shares and the end of 2023, according to analysis by BNP Paribas (3). And small cap shares have historically outperformed large cap stock, especially after recessions and over longer periods of time, says MSCI (4) — although higher debt costs and rising inflation meant that small cap growth was hampered in 2024 and 2025.
Now, as 2025 comes to an end, small-cap companies are finally catching a tailwind. After two years of underperformance, analysts from RBC and Morningstar note that valuations remain attractive — often trading at a 20% to 25% discount compared to large-cap peers.
This is when Buffett’s advice to look for “overlooked opportunities” applies, especially as Canadian and U.S. small caps rebound from their lows. Of course, it’s always advisable to diversify your portfolio and add some small caps to your investment list (rather than go all in on this type of investment).
If you’re curious where to find those hidden gems, Motley Fool’s stock analysis service can help. Motley Fool’s analysts regularly uncover small and mid-cap companies with long-term growth potential — the same kind of opportunities Buffett would have spotted early.
The platform is tailored for Canadian investors, providing monthly stock recommendations from both the Toronto Stock Exchange (TSX) and U.S. markets. The service emphasizes a long-term, buy-and-hold investment strategy, advising subscribers to hold stocks for at least five years.
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Tom Watson Sr., the founder of IBM (NYSE:IBM), once said, “I’m no genius. I’m smart in spots — but I stay around those spots.” That’s the mantra Buffett has applied to his investing philosophy.
Investing is risky, and Buffett has mitigated that risk by sticking to industries he understands. Much of his portfolio is focused on either simple consumer businesses or financial companies.
Buffett’s “circle of competency” is even more relevant today, when thousands of new investors rely on algorithmic or artificial intelligence (AI)-driven trading ideas. Buffett reminds us to focus on what we understand — simple businesses, transparent models, and steady returns.
If you’re building confidence as a DIY investor than start simple. One easy way to get started is by setting up a no-fee Simplii Financial Chequing Account, where your paycheque can automatically fund your high-interest savings, TFSA, or RRSP (using a Simplii High Interest Savings Account. Automating deposits helps you stay consistent — a key Buffett principle, while the no-fees helps you keep more of your money.
Open a Simplii Financial Chequing Account before October 31, 2025 and get $300 cash back and a $50 Skip The Dishes gift card (terms and conditions apply).
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We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
iValue Investing: Warren Buffett: How to Turn $10,000 into $30 Billion (1); Bloomberg: Bloomberg Billionaires Index (2); BNP Paribas Asset Management: The case for US small-cap stocks (3); MSCI: Small caps have been a big story after recessions (4)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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