Warren Buffett’s journey to becoming the “Oracle of Omaha” began with a mistake most everyday investors still make today: impatience.
In 1942, against the chaotic backdrop of World War II and shortly after the attack on Pearl Harbor, an 11-year-old Buffett pooled together his hard-earned money from shoveling snow and selling soda to buy his very first shares. What followed became the cornerstone of his entire investing philosophy.
The First Purchase: Cities Service Preferred
Buffett bought 3 shares of Cities Service Preferred (a natural gas company) for $38 per share, investing a total of $114.75. He also bought three shares for his sister, Doris.
Shortly after they invested, the market took a hit, and the stock plunged nearly 30% down to $27 per share. Feeling the intense pressure of losing his and his sister’s savings, Buffett waited anxiously for the stock to recover. When it finally climbed back up to $40, he sold immediately to secure a tiny profit of $2 per share.
The Regret: Right after he sold, the stock skyrocketed to $200 per share.
By jumping the gun just to get his money back, he missed out on a massive windfall. This taught him his very first rule of the stock market: never obsess over what you paid for a stock, and never rush to sell a good business just to secure a quick, minor profit.
The Power of Compound Interest vs. Stock Picking
Decades later, Buffett shared a striking math experiment illustrating what he truly regretted about that 1942 investment.
If he had taken that same $114.75 and simply put it into a no-fuss, broad-market index fund (like the S&P 500) and automatically reinvested all the dividends over his lifetime, that tiny sum would have grown exponentially.
| Year | Initial Investment | Lifetime Growth (With Reinvested Dividends) |
| 1942 | $114.75 | The baseline cash saved from childhood chores. |
| 2018 | — | ~$400,000 |
As Buffett pointed out, a single kid’s chore money could turn into nearly half a million dollars over one person’s lifetime—no constant trading or stressful stock-picking required. That is the unmatched power of American economic growth and long-term compounding.
Core Takeaways from Buffett’s WW2 Mistake
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Patience Wins the Game: Geopolitical crises, wars, and recessions create panic, but the market historically rewards those who wait. As Buffett famously notes: “The stock market is a device for transferring money from the impatient to the patient.”
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Don’t Fixate on Price Anchoring: Worrying about the exact price you paid makes you reactive. Focus on the long-term value of the underlying company instead.
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Time in the Market beats Timing the Market: The ultimate compounding machine requires decades, not days. Simple, continuous long-term investing outpaces short-term trading almost every time.
