Oprah Winfrey made a name for herself by giving advice to millions of people through her media empire. Recently, she borrowed a lesson from Warren Buffett's playbook, and it paid off.

Winfrey spent $43 million on Weight Watchers stock in October 2015, and since then, the price has soared from $7 a share to $101. That added $427 million to Winfrey's $4 billion fortune. She reportedly tried the diet company's new food plan herself and then backed the business with her personal brand by joining the board.

Understanding a business before you invest is one of Buffett's famous pieces of advice. The Berkshire Hathaway founder says he must comprehend how a company makes money and the main drivers that impact the industry in less than 10 minutes. If not, he doesn't invest. While the so-called Oracle From Omaha mostly takes his own advice--he shies away from investing in tech company stocks, for instance--he has stakes in Apple and IBM. He also famously indicated that he missed out on investing in Amazon

Even so, sticking to your knitting is a good idea. Buffett argues people can't predict the future with 100 percent accuracy and should therefore avoid situations that rely on a precise forecast. Winfrey took that advice to heart by putting her money into something she used and grasped.  

Published on: Jul 3, 2018