Warren Buffett AKA the “Godfather of Investing” has built his wealth on the foundations of long term value investing, a strategy that has made him one of the richest men alive today. In value investing, Warren Buffett is known for taking on firms that he understands, a strategy called “the circle of competence”. By understanding the companies operations, it gives the investor an insight into the companies potential something that is harder to do when you don’t understand the companies product or service. With recent markets sent tumbling, the virus continues to scare investors into selling off their positions in a bid of “loss aversion”. So here’s what you can take away from Warren Buffett’s position on the current global scare. Before reading further I recommend you watch this video by CNBC TV which gives great insight into the type of investor Warren Buffett is but further an insight into how more investors should be perceiving the markets –
CNBC Interview, Warren Buffet 2020
“Nobody really knows what the markets are going to do”
I found it refreshing to hear from someone who is so profound in the investing industry – that no one can really predict the markets future. You can go by in a day and hear a hundred people tell you where to invest and whether it is right or wrong. At the end of the day, all you can do is try make a calculated decision, and wait for the business to grow. He goes on to mention – what if you called buying stocks, buying into a business. They are the exact same concept however when buying a business, you would not consider buying or selling the business on a daily basis as businesses will perform well on some quarters and underperform on others. This is a perspective of the most successful investor of our generation, which is actually very different to how most investors view the markets daily movements.
What we can take away as investors during market uncertainty?
Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” Warren Buffett
Warren Buffet does say that the Coronavirus is “scary stuff” and that it poses a threat for businesses and the economy as it begins to worsen. Coming from someone who has such a large portion of his wealth in American Business, he still seems very collected which is probably an attribute of being in the market for so many years. Regarding his recent investments, he upped his Delta Airlines ownership to 11% to take advantage of low crude oil prices and the slump in Airline stocks globally due to the outbreak. Also Bloomberg covered a story that “Warren Buffett’s Berkshire Hathaway Inc. is pulling out of a gas export project in Quebec after weeks of rail blockade” however these reports are not confirmed. Warren Buffett continues to give us new investors a greater insight into the impact of value investing and discarding day-by-day news on the markets as good businesses will always recover stronger.
Here is our free, uncomplicated, and extensive ASX portfolio
Lastly, I could not post this without sharing my favourite tweet of all time by Warren Buffett. Enjoy the weekend!
Warren is in the house.
— Warren Buffett (@WarrenBuffett) May 2, 2013
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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Tyger Fitzpatrick, founder of YIG.