Capitalist Investor

Warren Buffett’s Secrets in the Age of AI: What Investors Need to Know, Ep. 325

• Strategic Wealth Partners

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This week on The Capitalist Investor, we dive into how Warren Buffett’s timeless investing principles apply in today's AI-driven market. Joined by special guest Dave Abboud, we break down why Buffett’s long-term strategies still matter—and how investors can use AI tools to think like the Oracle of Omaha. 

We cover:

  • Buffett’s biggest bets (Coca-Cola, Apple) and what made them genius
  • How to cut through the noise in today’s tech-fueled markets
  • The role of AI in identifying future winners (and why it’s just a tool)
  • Lessons from Charlie Munger’s “Too Hard” pile
  • Why discipline always beats hype in investing


Buffett may have underperformed in flashy bull markets—but his long game wins. Tune in to hear how you can apply these insights to build smarter portfolios in 2025 and beyond.
 
👉 Got questions or feedback? Reach out at info@swpconnect.com.
 

This week on The Capitalist Investor, we talk about Warren Buffett's The Oracle of Omaha and how his principles can be applied to the AI revolution. All right, we got a special guest back this week. Dave, about. How are you doing, buddy? I'm doing great summers here. Finally. Yeah. Cleveland. So excited. Absolutely. Got a little, Father's Day. And, last weekend I did a little, smoking, a little, barbecuing. So pretty. Pretty nice weekend. How about you? So, got to relax a little bit. Spend some time with the family. We headed out to a nice buffet. For Father's Day. It was, probably more than I wanted to, but, it all worked out nice. Yeah, that's. It's hard to pass up a good breakfast buffet. Honestly, it's one of my favorite things out there. You know, there, I want to go to Disney. You know how they have those, like, character breakfasts that are, you know, $9,000 per person? I make it a point to try to make up some of that money by eating as many Mickey waffles as I can. Exactly. And they're so good. So. All right. Well, hey, we got a good topic this week. Obviously a lot going on in the world and in the markets. But, you know, we talk about current events all the time. So, I thought this was pretty interesting as well. And topical, because, you know, as an advisor, Warren Buffett's name comes up all the time on, all the time. Even more so, you know, even a few years back when, when I was doing more of those, kind of, college classes that we talked, or that we taught, I should say. So it is interesting to basically, you know, kind of figure out or talk about the, the principles that Warren Buffett has used through the years to be so, so successful and how, you know, basically, I can, you know, use those principles and, and turn out some right answers, essentially. So, you know, just real quick, I'll set it up here real quick, Dave. You know, in case anyone out there, doesn't know. And that's okay, too, you know, Warren Buffett, you know, kind of hung his hat on, being a value investor. So, you know, kind of the complete opposite of what everyone's going for right now. You know, the the quick return, the quick buck. You know, Warren Buffett was looking for essentially undervalued companies, and investing in them long term that that's essentially how, you know, he, he became, so famous. You know, I think also it's worth noting, you know, he he wasn't just an investor, you know, he was a business person as well. And he made a lot of money. Loaning money out, especially back in 2008, 910 time frame, when everyone was out of money. So he made a lot of money, doing that. So, so, yeah, you know, Dave, anything you want to get in here at the top? Yeah, I think, you know, Warren's approach is one that can be of. So it's timeless, right? So it's one that can be applied to really any, you know, given time period. It's a great framework, I think, to view the world through. So like you said earlier, you know, the emphasis on, on value, having that longer term outlook. So he's, he's the opposite of reactive and you know, you know, you just you results immediately kind of thing. Like he, he had a vision. He sought out companies, high quality companies with strong management teams. And it's kind of like he used some common sense. It feels like it's kind of like, hey, guess what? You know, father or Father's Day, we can just past July 4th coming up. Guess what? People eat like a lot of barbecue. And then like, they put a lot of ketchup on that barbecue or and you're on their hot dogs and and burgers. Like, what about owning, like, a company that makes, you know, catch up? What do you think about that? Yeah. So that kind of common sense, down to earth approach has served him well. And it's, it's one that a lot of I think investors can follow his pattern. Yeah. For sure. So, yeah, just to give you kind of, some of the highlights of some of the bigger investments he's made, over time. You know, I think, Coke and Coca Cola, you know, probably in like the late 80s is probably when he started getting into that. And, I believe he's still invested in it today. So, you know, coca is, one of the most boring companies out there to invest in. Honestly, and again, you know, through and through all, all the years talking with people, you know, teaching some classes, doing other things, Coke as a value stock came up almost all the time. And that is 100% because, of Warren Buffett and the success that he had in, you know, in that stock in that company, and then probably one that, might have been a little controversial at the time. But it was Apple, and, you know, Apple is, you know, it's like if you turn on ESPN, they're probably going to be talking about the Cowboys or the Yankees. You know, if you, turned on, you know, Fox business, MSNBC, any anyone talking about stocks? There was this raging debate about Apple and its multiple. Yes. Yeah. And it was it an innovative company anymore. What are they going to do after the iPhone? Blah blah blah. And it went through a very long period of, you know, kind of stagnation, if you will. And then Warren Buffett got involved and basically said, guys, this is a no brainer. They're going to figure it out and it's going to be, you know, super profitable. And and he was right on that one. So, so, Dirk, I think you hit on another really important point there. One of I think Warren Buffett's super powers was his ability to separate kind of the signal from the noise. I'll call it. You know, there's so much chatter out there. And what is what is like the buy signal or what is the cell signal and what is just people just talking, just talking heads. And when he could, you know, identify and see that clearly as, hey, guess what, Apple is going to be around here another couple several decades into the future. And there you know there that leader leadership position. There's a lot of great minds working in that company. Like like you said, they're going to figure it out one way or another. It might not be in the next six months. But he was confident they're going to retain their market position in the years to come. Yeah for sure. So you know that's that leads us into you know so with a little background there, you know what? You know what what what can we use AI for in a practical sense right now? And you know, that that really leads us into the AI conversation. You know, you can use AI to, to basically do anything that, that you want to right now. And, you know, whether it's like health care or manufacturing, we can feed in the data to AI to say, hey, identify these companies for me. Using kind of Warren Buffett's, framework, if you will. And, you know, I think it's obviously very new, this whole AI technology, and how to use it, but it really it really allows you to analyze a lot of stuff extremely, extremely quickly. Yeah. And I and my take on, you know, the question of how to approach this is more like, a couple things like let two things like that, one of his, business partners, like Charlie Munger, he had a philosophy where there are so many opportunities that came by his desk, and one of his like, tenants was like, he had he had something called a to hard pile. If something was, he was looking at just like he couldn't wrap his mind around it because it was either too complex or outside of his loan, zone or beyond his level of, like, understanding. He just wouldn't get involved in it. Yeah. So, the reason I'm kind of saying that is, like, my thought pattern is almost like instead of trying to figure out the nuances of all these technologies, how about honing in on the management teams that have really smart people working for them and trust their abilities to figure it out, and how they would apply it to their business models? That that kind of makes more sense to me in terms of how, you know, how how we should approach the more the unknown. Yeah, absolutely. And that that is a that is a perfect example, of, of how it can help. And, you know, Tony and I did an AI episode, a while back. And by the end, I think we were, fairly secure in our job still, at the end, you know, it's, all I have are sports analogy. So I give you another sports analogy. You know, the the NFL draft, is is fairly similar to, to picking stocks, right? You got your, you know, your blue chips up, up, up front. And then as, as as the draft goes on, you're, you're basically taking fliers, right? You know, I has not, ruined the NFL draft by being able to, you know, just say, hey, you know, give me the best player right now. I feel like the stock of stocks in the stock market are fairly similar, just because there's such a human, human nature is, is very hard to predict. And there have been computer programs, you know, dating back before we even got into this industry, you know, trying to identify advantages, trying to identify, you know, nuances that the people might not be able to see. So, in our minds, and in my mind, it's really just another tool right now to help you, very efficiently, you know, choo choo through some data, to get to some answers that you're looking for. Yeah, that's that's exactly right there. There's an art and a science component to all of this. Right. So the number the technology can help you sort through and increase the probabilities and make it and maybe eliminate some choices that should be off your, your screens. Yeah. But at the end of the day I like the, the cube analogy. That's, that seems like the hardest one to pick up, right? Right. Like everything in line up perfectly in the guy ends up being a dud anyway. So a lot of it, you know, is depends on maybe the team they land on. Like if it's the Browns. Yeah. Or the market cycle. Right. And we'll talk about that later. But it's like what what is this market favoring. Where are we in this. Like are we expanding or are we in the maturation. Is it, you know, declining so that that plays into it as well? Yeah, absolutely. And you know, people have been charting things, you know, for since, you know, the beginning of time really. You know, we see all especially on the internet nowadays, you know, you get all of the, the complex, equations and, what's that one thing, the Fibonacci, the. Fibonacci. Sequence or whatever. So all of this stuff has been around forever. But, you know, I think, you know, going through this, just evaluating, an individual or company, is probably something that that I can do a really good job of right now, you know, give, you know, give me, you know, you find a stock that's done well and essentially say, hey, find me similar companies to, you know, Apple in 2007 or something like that. Yeah. Go ahead. Yeah. Exactly. And I think, you know, the other approach is like kind of keep it simple. Like who are the market leaders? Like yeah, who's in the dead center this trend. Right. We're looking for name brand market leaders. I mean, if I is this major story, like Nvidia has been in this leadership position and will likely have to be knocked out by someone else. So let's kind of ride that wave. Like the likelihood they're going to be around for, you know, the next decade or so is a higher probability than that unknown dark horse to come out of nowhere. Yeah. For sure. So, so what do you think? What do you think the, the future looks like here? I think it's exciting. In terms of, you know what? I think there are things that we can't even comprehend right now. Yeah. I mean, like the the the low hanging fruit can, you know, when you call in to make an appointment for your doctor, like, you really don't need to talk to a person anymore at this point, right? There should be some kind of an AI agent that can do all the scheduling, probably more accurately than than human can at this point. So all that low hanging stuff, you can just see the productivity gains. But the I think the more exciting stuff is the things that we can't even think about. Yep. Yeah, absolutely. You know, it's, oh, after you become an adult and you've been you've been an adult for a while, I think you understand. You know, even though you want things to stay the same, the things are changing and constantly evolving. And, you know, the, the, the world that that we're living in now is, you know, completely different than, than when we were kids. Right. And what our parents were dealing with. Exactly. And, you know, the other point that's exciting to me is I feel it will, give you an opportunity to have more what I'll call disposable time. Right. So instead, where you had to devote 10 or 20 or 30 hours to this task during your average week, you know, now you might have five more hours that you pick up during the week that are freed up, that you can actually choose how you want to spend your time that week. Yeah, absolutely. So, so, yeah, you know, I think in conclusion, it's something that we're going to be talking about for a while, something that we're going to need to monitor. You know, there's, there's a lot of, of real world applications that you can use AI for rather than, you know, just making funny videos, on the internet. And Dave hit the nail on the head, I think. I think right now, you know, it's just going to let you chew through data quickly. To, to to help you make decisions, more quickly and efficiently. Unfortunately, I don't think it's going to give you all the answers to the test and, you know, give you, the next, Nvidia or or the next Apple or the next, you know, whatever company you want to put in there. But it's definitely, you know, a tool that that's going to be used and ultimately, I think exactly what they've said, you know, it's we probably can't even really comprehend the way that it's going to, affect the world. You know, maybe by the time our kids, are in the, in the real world. But it definitely an exciting time. Yeah, absolutely. And, Derek, I wanted to circle back just, to Mr. Buffett for a second here. Thank you. I thought I had another kind of thought that hit me as far as great as as his track record was in his team's investing record was, you know, keep in mind, like the market's going to be the market. What I mean by that, it's like if you look back on this track record about a third of the years on an annual basis, he actually underperformed the S&P 500. So and and this was kind of a extrapolate okay. Especially if you look at cycles that were kind of bull markets where the growth stocks were leading the charge. Like there were a lot of people there or wondering if he lost his touch. Yeah. Because he was kind of trailing significantly. But he you know, over time it proved that, you know, hey, if you stick to my plan over the long term, you'll end out end up okay. But you do have to have patience, and you do have to have discipline to make sure you stay the course with what his vision look like. Absolutely. Yeah. And that's a great point. And and probably a good way to to wrap things up here. You know, the, the the basics of investing are never going to change really. You know, I think like that's that's a that's an excellent point. Yeah. You can have all the AI tools you want and, a full staff of, 20, you know, cfas and you can pick out the perfect stock and, you know, the next week covet could happen and it could be down 40%, you know? Yeah. You just don't really know. That's why, you know, Dave and Tony and I were always preaching kind of a long term outlook. And, because because we see it every day, it is become increasing really more difficult to pick out those huge winners because know the what can happen tomorrow. We just don't know. That's exactly right. And come up with a strategy, stick to it. And, you know, have confidence you'll get to where you want to be. Yep. Absolutely. And let these tools, you know, work for you. It's also important to understand them, understand what they can do. And, you know, it's going to be a great, a great addition, a great additional tool, for investors out there for sure. So, so, yeah, Dave, thanks so much for filling in this week. Really enjoyed it. If you guys out there have any questions, comments or concerns, hit us up at info at CNN.com and we'll talk to you next week. The opinions expressed in the podcast. Are for general informational purposes only, and are not intended to provide specific advice or recommendations for any investment, legal, financial or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.