The Oracle of Omaha never invested in tech stocks… until he did. Warren Buffett’s surprise move to start accumulating Apple stock with an initial $1 billion stake in 2016 now ranks as one of the greatest investments he ever made.
While they had previously focused almost entirely on value stocks, Buffett and his team at Berkshire Hathaway realized they could no longer ignore technology’s growth opportunities. They had to get in the game. As of this January, Berkshire Hathaway’s stake in Apple had grown to $73 billion, making it by far its biggest holding and accounting for about 25% of its portfolio.
Buffett, of course, is worshiped by the investment community for his genius in identifying undervalued companies, outperforming the market for decades, and turning Berkshire Hathaway from a struggling textile company into the world’s most successful investment vehicle.
But there’s another constituency that should be paying closer heed to the approach of Buffett and other smart investors—corporate heads of growth and innovation.
For those execs, it’s more important than ever to balance the Now and the Next—to cope with the incessant demands of the moment without getting distracted from the longer-term momentum that is truly shaping tomorrow’s world and their companies’ place in it. And some of the best lessons on how to do this don’t come from business schools or management gurus. They come from your financial advisor.
Financial advisors and wealth managers tend to guide their clients with a set of tried-and-true principles: simple, yet effective wisdom that has created wealth despite market crashes, international crises, and dramatic political shifts.
For sophisticated investors, these principles sound like Investing 101. And yet, most management teams don’t apply these same ideas to how they manage their growth initiatives. If they did, they might be far better equipped to drive sustainable growth, tune out short-term noise and focus on future opportunities. If you’ve ever sat down with an investment advisor, here’s what they probably told you…
1. Get in the Game
As Buffett’s Apple investment showed, you don’t win if you’re not in the game. Amateur investors often obsess over picking the right individual stocks, or stay out of the market until they feel conditions are perfect. But research has shown that the bulk of investment returns come from simply being in the market.
A 2023 study by Charles Schwab found that investors with bad timing beat those investors who stayed in cash through every single rolling 20-year period since 1926. The study found that a hypothetical investor with even the worst market timing crushed the returns of one who stayed in cash between 2003 and 2022.
The lesson for corporate growth and strategy leaders is to recognize that the perfect conditions for entering a new market are never going to exist, even though it may seem risky. Sitting on the sidelines waiting for those ideal conditions to fall into place is the riskiest strategy of all.
If you’re a carmaker today, you need to be in the electric vehicle game. The new U.S. administration’s rhetoric against EVs and its aim to kill tax breaks on them may make it feel like a risky time. But that doesn’t change the fact that the planet is warming or that governments are gradually phasing out the sale of gas-powered vehicles. Likewise, media companies need to be in the streaming game. It seemed like a scary place to be in recent years as new players crowded into the space, but we’re not going back to a world where viewers watch cable and will accept being tied to a traditional TV schedule.
2. Clarify Your Goals
When a financial advisor takes on a new client, they don’t immediately start discussing allocation strategies and expected returns. They start by asking about the client’s long-term goals. Maybe the person wants to retire early. Or maybe they have three kids to put through college. Depending on those goals, the investment strategy would be completely different.
Corporate leaders need to be just as clear-eyed about their goals. Growth for its own sake is not a strategy. Saying you want more innovation sounds great, but to what end? Are you looking for new revenue to compensate for a declining core business? Or are you trying to raise your EBITDA multiple with a compelling story to the street? Innovation for innovation’s sake isn’t much of a goal.
Leaders should identify their biggest opportunities, anticipate “doomsday” threats that could kill the business, and define clear success metrics. Target, for example, isn’t just competing with Walmart—it’s competing with Amazon. Clarity about the competitive landscape shapes the right risk-reward decisions.
And even beyond strategic objectives, there’s the question of purpose. The best companies aren’t just out there to make money; they stand for something bigger—whether that’s providing great customer service, bringing more joy into people’s lives, or caring for the environment.
3. Invest for the Long Term
One of the most effective ways to build stock market returns is to stop being alive. That’s what wealth management giant Fidelity Investments found a few years ago when it studied its best-performing client accounts. Many of its best performers had been dead for years. As a result, they weren’t tinkering with their holdings every time the market got scary.
Of course, dying has other downsides. But the dead have the advantage of not feeling the fear that most of us suffer in the face of short-term market turmoil. The best investors are able to tune out panicky emotions and keep their focus on long-term value. As legendary value investor Benjamin Graham said: “In the short run, the market is a voting machine, but in the long-run it is a weighing machine.”
Great businesses have the same mindset—they try and try again despite setbacks. Likewise, future-focused leaders don’t let dips in sales, failed projects, or negative headlines derail them from their long-term vision. Jeff Bezos famously gave Amazon initiatives a seven-year runway, while most companies operate on a three-year horizon or less.
In 2022, declining subscriber numbers sent Netflix’s stock plunging over 50%, prompting many commentators to start writing its obituary. But its relentless focus on investing in streaming and global content production are paying off over the long term. Its shares are now up nearly sixfold from that 2022 low.
Unfortunately, too many companies take a “launch and leave” approach: they try something once and then drop it when it’s not an immediate success. That’s not acting like Warren Buffett. That’s being the corporate equivalent of a day trader.
4. Focus On Valuation, Not Just Revenue
Investors don’t just track earnings when deciding what companies to invest in—they look at valuation multiples. Yes, a company with a high price-to-earnings ratio is more expensive, but that’s usually for good reason—it has a more compelling future growth story. Microsoft’s P/E ratio, for example, has risen to around 33 from the mid 20s in 2022 because its actions and statements have convinced investors that it’s positioned to play a leading role in the generative AI growth story.
A business valued at 10x earnings is viewed by the market as having a very different future than one at 20x. Leaders must ask what actions and strategies will tell a better story about their company’s future growth prospects. Universal Music Group, for example, is currently valued slightly higher than Microsoft, partly because CEO Lucian Grange has built a credible story about its future growth prospects through strategic acquisitions and collaborations with tech platforms like Spotify and YouTube.
While most large company executives can tell you what their sales were last quarter, a smaller number can tell you what multiple their stock is trading at. And they have an even shakier understanding of the relationship between the growth story they present and the multiple they achieve.
5. Walk The Stores
Legendary investor Peter Lynch, the former head of Fidelity’s Magellan Fund, swore by firsthand research. “Invest in what you know” was his mantra. That means that if he was considering investing in a retail chain, he wouldn’t invest a cent before going to shop at one of its stores. He invested in Dunkin’ Donuts after personally visiting its store, being impressed by how good its coffee was and seeing how busy they were. Warren Buffett takes the same “walking the floors” approach. John Mackey, the founder of Whole Foods Market, once told me that he never signed off on a new store location without personally walking around the neighborhood first.
Yet many executives rely on PowerPoints and consultant reports rather than direct experience. If you’re running a restaurant chain, eat at your own restaurants—and your competitors’. If you’re in auto manufacturing, test-drive your own cars and those of rivals. Data is great, but you need the experience, too.
6. Take A Portfolio Approach
Good investors diversify their portfolios across sectors and geographical areas in order to insulate themselves from individual company risks and ensure stability. Berkshire Hathaway owns companies across industries, from insurance to railroads to consumer goods and technology firms.
Corporate leaders should do the same with their initiatives. Instead of a pipeline where one project follows another, companies need a balanced portfolio: short-term initiatives for quick wins, medium-term projects for steady growth, and long-term bets that could reshape the business. Too often, firms place all their bets on the next iteration of their current product, rather than planting seeds for multiple future directions.
7. Don’t Time The Market
Even expert investors can’t consistently time market highs and lows. That’s why dollar-cost averaging—investing steadily over time through market ups and downs—wins.
Yet companies routinely halt long-term investments during downturns, planning to restart “when the time is right.” That’s what Ford did in mid-2024 when it announced it was scaling back its EV ambitions, citing uncertainty over demand and legislation. The long-term trend toward EV adoption is likely to make that decision look overly hasty.
Businesses should maintain a steady commitment to innovation, even in tough times. As with dollar-cost averaging, they should invest consistently into projects that will drive future growth both during good times and bad. Cutting back on R&D or experimental projects in lean years is a good way of ensuring that competitors pull ahead when better conditions return.
Positioning For The Next
If there’s a single takeaway for executives from the wisdom of the best investors, it’s this: success doesn’t come from reacting to the present—it’s founded on positioning for the future.
Like Buffett, strategy and growth leaders need to remember that their companies aren’t just a series of quarterly earnings reports—they’re bets on a future that’s still at least 5-7 years away. The ones that tell the most credible stories about that future and keep their eyes on it, despite short-term crises, bad news weeks, and scary headlines, will end up with outsized returns. Future-focused leaders balance the Now and the Next. And the best ones look a lot like savvy investors.