This is where things get genius. In 1976, Buffett started buying GEICO, an auto insurer. Why insurance? Because of "float." Float is the money customers pay you today that you only have to pay back in claims later. It’s like your friend giving you lunch money for a month, but you spend it while promising to pay him next week.
Buffett used that billions of dollars of float to buy stocks like Coca-Cola, American Express, and Apple. It’s basically the world’s best piggy bank that also makes you interest. He calls it "free money," and I call it financial wizardry.
The "Circle of Competence" Rule
Buffett never invests in things he doesn’t understand. You won’t catch him buying Bitcoin or tech startups that lose millions. He said, "Never invest in a business you can’t draw a picture of." So if you can’t explain how a company makes money to your grandpa, walk away.
Warren Buffett se va y acciones de Berkshire Hathaway se desploman
That’s why he bought See’s Candies—it’s chocolate. Everyone loves chocolate. Even in a recession, people buy chocolate and cherry Coke. Simple, brilliant, and delicious.