Warren Buffett has spent decades building one of the most studied companies in the world. But one of the most useful lessons from Berkshire Hathaway has nothing to do with buying entire businesses. It comes from how the company handles its own stock.

Berkshire has historically only repurchased shares when the price trades below what Buffett and his team calculate as intrinsic value. That sounds simple enough. It is anything but. As The Motley Fool noted this week, the discipline behind those buybacks offers a framework individual investors can learn from, even if they never run a conglomerate.

The core idea is this. When a company buys back its own stock below intrinsic value, the remaining shareholders get more business for the same dollars. Each share represents a slightly larger slice of the pie. But when a company buys back stock above intrinsic value, the opposite happens. The company overpays, and the remaining shareholders end up with less value than they would have had if management had simply held the cash or paid a dividend.

Berkshire's approach has been to sit on cash, sometimes enormous piles of it, rather than buy shares at prices that do not make sense. That requires a patience most corporate boards do not have. Wall Street loves buybacks because they boost earnings per share in the short term, which lifts the stock price, which makes executives with stock options happy. Whether the buyback actually created value for long-term owners is a question that gets asked much later, if at all.

I think about this whenever someone asks whether they should be buying individual stocks right now. The Berkshire framework translates pretty cleanly. If you would not want a company buying its own stock at today's price, why would you want to buy it yourself at that same price?

This is where it gets uncomfortable, because the honest answer is that most people do not have a clear sense of what a stock is actually worth. They know the price. They might know the price-to-earnings ratio. But intrinsic value is a different calculation entirely. You have to estimate future cash flows, apply a discount rate, and build in a margin of safety for the fact that your estimates are probably wrong. I have been doing this for forty years and my estimates are still wrong more often than I would like.

That is exactly why I keep coming back to broad index funds for most investors. You do not need to calculate the intrinsic value of 3,500 companies. You just buy them all, regularly, at whatever price the market sets, and let compounding do its work over decades. It is the financial equivalent of not needing to be the smartest person in the room.

But for the portion of your portfolio where you do pick individual stocks, the Berkshire lesson matters. Buy when the price is below your estimate of value. Hold cash when it is not. Do not let the pressure to always be invested push you into paying more than a business is worth.

The hardest part is the waiting. Berkshire has gone long stretches without meaningful buybacks, and Buffett has caught plenty of criticism for it. People said he was out of touch. They said he had lost his edge. Then the market would correct, the price would fall below intrinsic value, and the buybacks would resume at exactly the right time.

Cash is not a failure state. Patience is a strategy.

If you are building a portfolio and wondering whether to deploy cash today or wait, ask yourself the question Berkshire asks. Is the price below the value? If you cannot answer that with some confidence, index funds are there for you. No intrinsic value calculation required.

As always, I am sharing perspective, not professional financial advice. Talk to a qualified advisor before making investment decisions.