“Price is what you pay. Value is what you get.” - Warren Buffet
The “Oracle of Omaha”, Warren Buffet recently announced his plan to step down as CEO of the investment behemoth Berkshire Hathaway. While Buffet plans to remain as Chairman of the company, the shift away from the helm offers the opportunity to reflect on Buffet’s investing strategy and wisdom.
Widely regarded as one of the greatest investors of all time, Buffet’s investment philosophy is rooted in Value Investing, a strategy pioneered by his mentor, Benjamin Graham. Value Investing is a long-term approach which focuses on buying undervalued companies – that is, companies which are trading at low prices relative to their true value (trading at a ‘discount’). Buffet famously said, “It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”
Buffet is also well known for his emotional intelligence, abiding by the same principles his whole career and never becoming swayed by euphoria or panic. Buffet touts time in the market over timing the market as a key strategy in managing emotion.
When markets correct downwards, fear often takes over, prompting many investors to sell their investments. Buffet, however, takes the opposite approach. He buys high-quality assets at discounted prices during times of fear, confident that their value will appreciate over the long run. Buffet’s quote “Be fearful when others are greedy, and greedy when others are fearful” is a timeless testament to Buffet’s approach to investing.
Buffet’s principles and investing style have demonstrated resilience and staying power through a range of market environments, given Buffet’s approximately 74-year history in the markets.
Our funds and portfolios implement Value Investing considerations, particularly through our usage of the underlying Dimensional Global Sustainability PIE and Dimensional Australian Sustainability PIE funds. We also include these considerations in our stock selection.
If you are ever feeling restless or fearful, remember: “We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” – Warren Buffet
What we’re reading: 60 Warren Buffett Quotes (On Life, Success, Investing)
