📖Warren Buffett

Stay Humble

🌿 Intermediate★★★★★

Early success in investing can breed the overconfidence that leads to catastrophic losses.

💬

The most dangerous thing for a young investor is early success.

— CNBC Interview with Warren Buffett，2010

🏠 Everyday Analogy

Just like driving, new drivers are most prone to accidents right after getting their license, as a small taste of success can make them feel like seasoned veterans. The same holds true for investing—early gains often lead people to forget the presence of risk, only to crash at the next turn.

📖 Core Interpretation

The market punishes the overconfident. Stay humble, and always assume you could be wrong.
💎 Key Insight：A new investor who makes money quickly often believes they've cracked the code. In reality, they may have benefited from a bull market or luck. Overconfidence leads to larger bets, less research, and eventually a devastating loss. Buffett warns that the market is designed to humble those who confuse a rising tide with personal genius.

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❓ Why It Matters

Success often leads to overconfidence. When Buffett claims he "doesn't change," he is referring to maintaining a mindset of humility and continuous learning.

🎯 How to Practice

Regularly review mistakes, seek advice from others, and read articles that present opposing viewpoints.

🎙️ Master's Voice

What we learn from history is that people don't learn from history.
Buffett often warns about the dangers of a bull market. He notes that in bull markets, everyone looks like a genius, which breeds dangerous overconfidence. He saw this in the late 1960s, 1999, and 2007. Those who confused a rising tide with swimming ability often drowned when the tide went out.

⚔️ Practical Guide

✅ Decision Checklist

  • Am I attributing success to skill rather than luck?
  • Have I tested my strategy in bear markets?
  • Am I increasing position sizes after wins?
  • Do I still follow my original investment criteria?

📋 Action Steps

  1. Keep a decision journal to separate luck from skill
  2. Study your losses more carefully than your wins
  3. Maintain consistent position sizing regardless of recent results
  4. Review your investment process, not just outcomes

🚨 Warning Signs

  • Taking larger risks after a winning streak
  • Believing you've "figured out" the market
  • Abandoning your investment rules after success
  • Dismissing cautionary advice from experienced investors

⚠️ Common Pitfalls

✕Success proves my prowess - success may involve an element of luck, so stay grounded.
✕Humility implies a lack of arrogance—it is maintaining skepticism toward one's own judgments while adhering to principles.

📚 Case Studies

1
LTCM (1998)
Overconfidence of Nobel Laureates
✨ Outcome：Bankruptcy
2
Disclosure of Buffett's Mistakes (2010)
Publicly acknowledging mistakes in the annual shareholder letter every year
✨ Outcome：Remain Humble and Act with Integrity

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