Warren Buffett is worth a whopping USD$150 billion — but he says there’s 1 big reason people refuse to invest like him. Are you making this crucial money mistake, too?

“Well, I think partly because it is so simple,” Buffett responded.

Here’s why he believes neglecting the simple approach is the biggest mistake many professionals and academics make while investing.

The value of simplicity

Academics and professionals get bogged down with overanalyzing data simply because they have the skills and the data is available, Buffett told Goodman.

“As a friend of mine says, to a man with a hammer everything looks like a nail. And once you have these skills, you just are dying to utilize them in some way. But they aren’t important,” he said.

Since the interview, the amount of data available to the average investor has exploded.

In fact, ordinary investors even have access to tools such as Insider Tracking, which follows the trades of corporate insiders, and SkyFi, which offers investors satellite imagery.

This niche data might be useful in some cases, but it can also overcomplicate your investment strategy. Instead, most investors should consider Buffett’s relatively straightforward approach.

Applying the Buffett approach

According to Buffett, investing isn’t a complicated data science experiment but a relatively simple business deal.

“If I were being asked to participate in a business opportunity, would it make any difference to me whether I bought it on a Tuesday or a Saturday or an election year or something?,” he asked Goodman. “It’s not what a businessman thinks about in buying businesses. So why think about it when buying stocks? Because stocks are just pieces of businesses.”

To apply Buffett’s bottom-up approach, consider the merits and fundamentals of the business underlying each stock. Take the time to understand what the company produces and how it makes money.

For instance, if Nvidia stock were on your radar, it might be a good idea to learn about their semiconductor business and how demand is impacted by the rise of artificial intelligence software. It could also be worth considering products in their pipeline, such as the Blackwell Superchip, and its potential impact on the business's future.

The next step would be to examine the company’s fundamentals. A good product or service isn’t necessarily a good investment if the company is struggling to generate profit or cash flow. A track record of safe and consistent dividend payments could suggest that the underlying business is healthy and lucrative enough to reward shareholders.