An Oprah Investment Straight Out of Buffett’s Playbook

At 88 years old, Warren Buffett, also known as the Oracle of Omaha, represents tremendous success and wisdom to investors of all stripes, from neophytes to seasoned experts. In addition to his staggering wealth, Buffett is famous for his common-sense tips, which tend to take the smoke and mirrors out of investing and boil it down to a few simple, sensible tenets.

Two of his popular ones? "Never invest in a business you can't understand" and "Why not invest your assets in the companies you really like? As Mae West said, 'Too much of a good thing can be wonderful.'" His advice has been well heeded by many, including, it appears, the incomparable talk-show host and media guru, Oprah Winfrey.

In the fall of 2015, Winfrey purchased 10 per cent of Weight Watchers, saying, "I believe in the program so much I decided to invest in the company and partner in its evolution," when she announced the deal.

Over the years, Winfrey has been open with fans and viewers about her struggles with weight loss. Once, she even brought a red wagon loaded with 67 pounds of fat onstage during her show to depict how much she'd lost. In an interview for her magazine, O, she said, "With all the other things that I know how to do and all the other things that I'm so great at and all the other accomplishments, I can't believe I'm still talking about weight. For me it is not a cosmetic issue. It is an emotional issue. When my engine runs down, my drug of choice is food."

Years later, Winfrey decided to invest in what she knows. Taking a page out of Buffett's book, she tried the Weight Watchers program as a customer before becoming an investor. "Weight Watchers has given me the tools to begin to make the lasting shift that I and so many of us who are struggling with weight have longed for," Winfrey said in a statement.

Peter Lynch, investor and '80s-era rock-star mutual fund manager, agrees with Buffett's strategy, but with a few caveats. Investing in what you know doesn't mean buying shares of Starbucks just because you drink a lot of coffee, for example. "People buy a stock and they know nothing about it," he says. "That's gambling and it's not good." A better strategy is to study stocks in industries very familiar to you, comparing and analyzing them until you have a full sense of which companies would make good investments, and why.

As for the amazing Ms. W, you can bet she applied a lot more than just her size struggles to the Weight Watchers deal. Oprah's business savvy is legendary and, in addition to what must have been a deep dive into the weight-loss business, she leveraged her own celebrity to help Weight Watchers.

Winfrey's thoroughness may go above and beyond what everyday investors would do, but still, it speaks to the importance of doing your research and understanding if a particular investment is the right choice for you.

*The headline of this article was changed on November 27, 2018.