World-famous investor Warren Buffett has accumulated a fortune worth over $70bn throughout his seven decades of stock market dealings. At 89 years-old, Buffett is still chairman and CEO of Berkshire Hathaway, his main investment vehicle. Who better to look to for advice on getting started in buying stocks and shares?
With the world battling the coronavirus pandemic, global financial markets are not having a good time. Prices are volatile and fortunes are being lost, but for cautious and prudent investors I believe money can still be made.
Value investing strategy
Over the years, Warren Buffett’s value investing strategy has made many millionaires out of ordinary investors. Long ago, he divulged his tenets for investing. These are the main points he considers when looking to buy shares in a company.
One of these is choosing a business that he understands. So, if you’re following suit, do you understand the business you want to buy shares in? Does it have a competitive edge that you understand and respect? If the answer is yes, then this is a great place to start. If not, then you probably donât want to be buying shares in a company you donât understand.
Follow Warren Buffettâs lead
One of Warren Buffettâs famous quotes is: âPrice is what you pay. Value is what you get.â
This rings true for me at times like these because when a stock price is fluctuating rapidly it’s nigh on impossible to time your purchase at the lowest price point. If youâre confident in the company youâre buying shares in, then the price you pay should be almost irrelevant. Accepting that your stock purchase could lose value in the short term but will ultimately gain over the long term isnât easy. Iâd say itâs one of the most difficult thought processes that long-term investors need to get to grips with.
Market crash opportunities!
In his February shareholder letter, Buffett said he expects Berkshireâs portfolio of US-listed stocks to deliver âmajor gainsâ, albeit irregularly.
Buffett encourages investors to think long term, focusing on Berkshireâs operating results and the intrinsic value of its stock holdings.
The pandemic poses a challenge for even the most esteemed investor. However, Buffett has decades of experience of investing and outperforming in down markets. He advocates that over the long term, Berkshires performs âin a very, very safe mannerâ.
He has a framed copy of the New York Times from the 1929 stock market crash, hung in his Berkshire Hathaway office. It also serves to remind us that anything can happen, and careful consideration over your investments is vital.
Iâd be very surprised if Buffett wasnât buying stocks during this market crash. He knows how to spot value in top quality companies, and Iâd bet thatâs exactly what heâs doing.