Warren Buffett once shared his simple strategy for avoiding big mistakes in the stock market — says you ‘don’t need to listen’ to gurus, read the news or do anything after. Are you invested?

But the stock market is unpredictable, and not everyone shares Buffett’s track record. We’ve all heard cautionary tales of investors losing fortunes chasing stock tips.

Buffett believes many investors fall into a fundamental trap. In an interview with Yahoo Finance, Buffett was asked what he sees as the biggest mistake investors make.

His response was immediate: “They just don't realize that all you have to do is just buy a cross section of America, and they never listen to people like me or read the papers or do anything subsequently. They think that because you can trade, you should trade.”

Put simply, investors trade too often. Buffett attributes this issue to the stock market’s low transaction costs compared to other asset classes.

“You buy a farm, you buy an apartment house, you can't resell it tomorrow [because of] the cost of moving around. Now you get something handed to you — liquidity, which in an instant, you can sell, and the cost of doing it are pennies compared to other kinds of investment activity. So because they can so easily move around, they do move around and moving around is not smart in investing,” he explained.

In other words, just because you can trade frequently doesn’t mean you should.

‘The best thing to do’

Buffett’s message is clear — long-term success in investing doesn’t require constant buying and selling. Instead, he advocates owning a “cross section of America.”

This philosophy stems from his unwavering confidence in the U.S. economy.

“American business — and consequently a basket of stocks — is virtually certain to be worth far more in the years ahead,” Buffett wrote in his 2016 letter to shareholders.

Berkshire’s own investment strategy reflects this belief. Its $295-billion equity portfolio is heavily weighted towards American companies across diverse industries, reinforcing Buffett’s faith in the nation’s long-term economic strength.

For those unsure about which American businesses to invest in, Buffett offers a straightforward solution: “In my view, for most people, the best thing to do is own the S&P 500 index fund,” he famously stated.

This simple approach gives investors exposure to 500 of America’s largest companies across various industries, providing diversified exposure without the need for constant monitoring or active trading.

Buffett’s commitment to this strategy is evident in his estate planning: he has directed that 90% of his wife’s inheritance be invested in “a very low-cost S&P 500 index fund” after his passing.

The beauty of this approach is its accessibility — anyone, regardless of wealth, can take advantage of it. Even small amounts can grow over time with tools like Acorns, a popular app that automatically invests your spare change.

Signing up for Acorns takes just minutes: link your cards, and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio. With Acorns, you can invest in an S&P 500 ETF with as little as $5 — and, if you sign up today, Acorns will add a $20 bonus to help you begin your investment journey.

Buffett likes productive assets

Buffett’s point about how “you can’t resell it tomorrow” when investing in farmland or apartment buildings is also worth highlighting.

Unlike stocks, which can be traded instantly, real assets come with higher transaction costs — but that’s not necessarily a drawback. Investors typically aren’t looking for quick flips; they’re in it for the long-term income these assets generate.

With farmland, you can earn money through crop sales or leasing fees. With rental properties, you can collect monthly rental income — both providing a steady cash flow while the asset itself appreciates over time.

Buffett has personal experience with both. In 1986, he bought a 400-acre farm near Omaha, and in 1993, he acquired a New York retail property next to NYU.

His verdict?

“The two investments will be solid and satisfactory holdings for my lifetime and, subsequently, for my children and grandchildren,” he wrote in his 2013 letter to Berkshire shareholders. He also predicted that the income from the two investments “will probably increase in the decades to come.”