Warren Buffett's Investment Strategy, Explained With Buffett Quotes & Stocks

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Warren Buffett is arguably the most respected investor of all time, and for good reason. In his 54-year tenure as CEO of Berkshire Hathaway Buffett has delivered annualized returns of over 20% for investors as of mid-2019, more than twice the pace of the S&P 500 over the same period. And he's done it without applying any extraordinarily complex methods. In fact, Warren Buffett's investment style is surprisingly simple.

FULL ARTICLE: https://www.fool.com/investing/how-to-invest-like-warren-buffett-2019-and-beyond.aspx

In this FAQ video, we’re going to break down how the “Oracle of Omaha” invests by looking at his current and past holdings and some of our all-time favorite Buffett quotes.

Perhaps my favorite Buffett quote of all time is, "You can't produce a baby in one month by getting nine women pregnant." In other words, some things just take time. The first thing you need to do if you want to invest like Warren Buffett is to stop chasing short-term gains.

In fact, Buffett doesn't even buy stocks because he thinks their share prices are going to go up. He focuses on buying good businesses that are well run. If you look at Berkshire Hathaway's current stock portfolio -- especially Berkshire's largest holdings -- you might notice that there isn't a ton of variety. Specifically, among Berkshire's top 10 you'll find no fewer than seven banks, as well as two large investments in food companies. Apple is the only stock not in these two categories.

Simply put, Buffett feels that it's better to have an undiversified portfolio made up of businesses he understands well than to have a diversified group of stocks he isn't well-equipped to evaluate.

Buffett refers to this concept as staying in your "circle of competence." As he says, "You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital." In other words, if you know banks really well, as Buffett does, there's absolutely nothing wrong with owning a lot of bank stocks.
Having a deep knowledge of a space gives Buffett a better sense of the actual value of the businesses he’s holding, and he is one of the most notoriously value oriented investors in the biz.

As Buffett likes to say, "Price is what you pay. Value is what you get." The basic concept of value investing is simple: By investing in stocks that are trading for less than they are truly worth, you have an inherent advantage as a long-term investor.

However, finding stocks that are trading at a discount is easier said than done.

A full-scale discussion of value investing is beyond the scope of this video, but if you want to learn how to value invest like Buffett, the best place to turn are the teachings of Benjamin Graham -- Buffett's mentor. Buffett himself has referred to Graham's book, The Intelligent Investor, as the best book on value investing ever written.

Now you might be wondering -- what characteristics does Buffett actually look for in businesses?

Look for companies with a strong track record of raising dividends and whose management team has their interests aligned with those of shareholders. For example, here at the Fool we like to see incentive-based compensation tied to long-term performance goals, as opposed to a single quarter's earnings.

Another concept that's important in Buffett's investing style is identifying a durable competitive advantage -- often called a moat. For example, Apple's loyal customer base gives the company a big advantage going forward and is a big reason the stock is Berkshire's largest holding. Coca-Cola has a massive distribution network and one of the best-known brand names in the world, the combination of which gives it efficiency advantages and pricing power over peers.

Some of the best Buffett quotes really get at the psychology of investing, and maintaining a level-headed approach, even when things go haywire.
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Видео Warren Buffett's Investment Strategy, Explained With Buffett Quotes & Stocks канала The Motley Fool