6 Investments Warren Buffett Refuses to Make (and Why)

Warren Buffett has spent more than 60 years building an investing legacy. He announced earlier this year his plan to step down as CEO of Berkshire Hathaway, but millions still look to him for guidance on where (and where not) to put their money.

If you're looking to start investing, it's worth taking a closer look at the companies he's been wary of and why.

Buffett has long been wary of startups and the tech industry as a whole. While companies like Amazon, Apple, and Facebook are now household names, Buffett kept his distance for years due to their sky-high price-to-earnings ratios and general unpredictability. One of his most popular investment philosophies is a "margin of safety," meaning he wants to invest where there's less risk of losing money. Many tech companies just don't offer that safety net.

That said, he has come around to those companies that have proved their stability. Apple now makes up a significant chunk of Berkshire Hathaway's portfolio. However, it's worth noting Buffett sold $80 billion of Apple stock in 2024. Perhaps his reservations still resurface from time to time.

These days, Tesla is surrounded by controversy, but Buffett was never one to consider the stock even before it started making headlines this year. Similar to his reservations about tech companies, the stock prices for Tesla can be too speculative. The company also operates in an industry that is primed for rapid innovation, making it challenging for a single brand to truly stand out against the competition.

Buffett also has strong opinions about CEOs and their role at their respective companies. He's quoted as saying, "It takes 20 years to build a reputation and five minutes to ruin it." Elon Musk is a volatile figure who doesn't fit the mold of someone Buffett would want to align himself with.

It comes as no surprise that Buffett has spent years avoiding cryptocurrency. Like Facebook and other tech companies, he simply isn't interested in investing in something he doesn't fully understand.

However, it's worth noting Berkshire Hathaway raised some eyebrows when it invested in Nu Holdings. It's a Brazilian company with its own crypto platform. The amount put into this company was incredibly small when looking at Buffett's entire portfolio, though.

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Buffett doesn't shy away from derivatives entirely, but he applies his same risk aversion to them because he views them as "financial weapons of mass destruction." For those unfamiliar, derivatives are complex financial contracts whose value depends on the performance of an underlying asset, like stocks, bonds, interest rates, or even commodities.

Considering that derivatives were a factor in the 2008 financial crisis and multiple hedge funds that relied on them imploded, Buffett seems to be right on the money. 

Buffett has also been uninterested in gold, calling it an "unproductive asset." However, Berkshire Hathaway did invest in Barrick Gold back in 2020. As one of the world's largest producers of gold and copper, the reasoning for the investment could have been that it wasn't actually gold itself, but a company that sold gold.

Whatever the reason, though, the partnership was short-lived, and the firm sold its shares months later.

One investing mistake that has haunted Buffett is when he bought stock in Delta, American, Southwest, and United Airlines in 2016. No one could've predicted the pandemic, though, and in 2020 Berkshire Hathaway sold their shares at a substantial loss.

Airline travel has resumed, but with continued reports of aircraft failure and the like, this is enough to keep Buffett away.

Many of Buffett's fans see his successes as evidence of his financial genius, but the lessons he learned from his failures may be just as important. The investor has consistently followed his investing principles, which rely less on chasing trends and more on patience and understanding a company's true value.

If you're looking to follow in his footsteps, look for companies with consistent earnings and strong leadership, both of which are clear signs of financial success.