After 52 Long Years, Warren Buffet Explained How He Finally Learned This Very Useful Lesson

Here’s an unusual story about Warren Buffett that contains a  crucial lesson. I came across it recently.

It has to do with Buffett’s legendary penchant for drinking huge amounts of Coca-Cola, and a related insight that he says took him 52 years to understand.

If he’d figured it out earlier, he’s said, he would have made an awful lot of money.

First, Buffett and Coca-Cola.

“I drink at least five 12-ounce servings [of Coca-Cola] … every day,” he told Fortune in 2015, adding: “I’ll have one at breakfast.”

If any of this is an exaggeration, it’s a consistent one. Buffett also claimed in his 1991 letter to Berkshire Hathaway shareholders, for example, that he was, “a happy consumer of five cans of Cherry Coke daily.”

Since Buffett is now 90 years old, I’m not going to waste time criticizing his diet. So, let’s shift to the related investing lesson that he says took him 52 years to learn.

I’ll let him tell the story, from his 1989 shareholder letter:

“I believe I had my first Coca-Cola in either 1935 or 1936. Of a certainty, it was in 1936 that I started buying Cokes at the rate of six for 25 cents from Buffett & Son, the family grocery store, to sell around the neighborhood for 5 cents each.

In this excursion into high-margin retailing, I duly observed the extraordinary consumer attractiveness and commercial possibilities of the product.

I continued to note these qualities for the next 52 years as Coke blanketed the world. During this period, however, I carefully avoided buying even a single share…

Only in the summer of 1988 did my brain finally establish contact with my eyes.”

Some years were better than others for Coca-Cola during the half-century interval.

But Buffett explained that it would have been such a good long-term investment that, “if I had been thinking straight I would have persuaded my grandfather to sell the grocery store back in 1936 and put all of the proceeds into Coca-Cola stock.”

Instead, he poured his investment dollars for decades into “street railway companies, windmill manufacturers, anthracite producers, textile businesses, trading-stamp issuers, and the like.”

Today, Berkshire owns 400 million shares of Coca-Cola, which worked out to 9.3 percent of the company, worth about $21.9 billion as of the most recent shareholder letter.

And it’s tempting perhaps to look at this as just an amusing anecdote. But as Buffett as pointed out, there’s a broadly applicable lesson. He explained it memorably with a quote from Henry David Thoreau, the 19th century transcendentalist author and philosopher.

“It’s not what you look at that matters,” Thoreau said, as quoted by Buffett. “It’s what you see.”

You know what this means in your business and life, whether your business is investing like Buffett’s, or something else. Often, the simple answers to the big challenges you face are staring you right in the face, if only you can train yourself to recognize them.

• There’s the skill you developed with no thought of how it could help you succeed professionally, but that you now find differentiates you from the field.
• There’s the product you thought might have been a sideline, that turns out to be your main business.
• There’s the employee who you hired for a defined role, and who has proven himself or herself more valuable than you originally imagined.

Mandatory post-script to this story: Despite having sold Coca-Cola as a child and admired the company, and despite ultimately becoming a ravenous consumer, Buffett was partial to Pepsi for most of his life, to the point that one of his son’s childhood friends remembers Buffett having been nicknamed, “Pepsi Warren.”

He switched brands after a neighbor from growing up in Omaha, Don Keough, who rose to become president and chief operating officer of Coca-Cola, sent him a case of Cherry Coke, before it was available to the public.

The result was swiftly realized.

“After 48 years of allegiance to another soft drink,” Buffett wrote on March 4, 1986, two years before starting his Coca-Cola investing spree, “your Chairman, in an unprecedented display of behavioral flexibility, has converted to the new Cherry Coke. Henceforth, it will be the Official Drink of the Berkshire Hathaway Annual Meeting.”