Warren Buffett Says A Surge In People Doing 'Big Dumb Things' Is Tied To Historically Easy Access To Other People's Money

Warren Buffett, the “Oracle of Omaha,” shared significant thoughts on investing at the 2023 Berkshire Hathaway Annual Meeting. One of his main points? More people are making bad money choices – what he called “big dumb things” – because of the unprecedented ease of accessing other people's money.

According to Buffett, there has been a significant increase in opportunities for investors due to this phenomenon. 

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Too Much Money, Too Easily

Buffett explained that it's now easier than ever to get money to start risky businesses, fund questionable projects or gamble on ideas that might not work. “You could start 10 or 15 dumb insurance companies in the last 10 years and you could become rich whether the business succeeded or not and the underwriters got paid and the lawyers got paid.” Because so much money is available, people and companies can make big mistakes that astute investors can learn to profit from.

He quipped that in Berkshire Hathaway's BRK 58 years, the number of people doing “dumb things” has only grown and these missteps are often amplified because it's now easier to attract money. "You couldn't get the money to do some of the dumb things we wanted to do," he joked.

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A Common Pitfall

Buffett explained that one of the main reasons people make poor decisions is an overwhelming focus on short-term results. From investor relations calls to financial forecasts, much of the market revolves around meeting or slightly beating expectations for the next quarter. This shortsighted approach creates a playground for long-term thinkers.

Buffett stressed that looking years, if not decades, into the future and ignoring others are typically key components of successful investing. Most investors concentrate on completing spreadsheets for the current year, while Buffett and Charlie Munger, his partner, look for possibilities that will pay off in five, 10 or even 20 years.

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Dumb Decisions Create Opportunities

So, why does this matter to the average investor? Buffett's main point is that other people's mistakes create chances for patient, smart investors. He said success doesn't come from chasing trends like AI or new industries. Instead, it's about finding good opportunities in the errors others make.

"What gives you opportunities is other people doing dumb things," Buffett said. He added that these mistakes aren't going away anytime soon.

The Rise of “Selling Ideas”

Buffett also swiped at the broader financial industry, saying the real money these days isn't in outperforming the market but in selling ideas to others. Many companies and funds focus more on marketing their strategies to attract investors rather than delivering long-term value. This, too, creates inefficiencies in the market that disciplined investors can exploit.

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