At the Berkshire Hathaway (BRK-A, BRK-B) annual shareholder meeting on Saturday, Warren Buffett addressed investors with his usual tips for becoming one of the most touted investors.
One key: don’t be emotional – at least in business matters.
“I can’t remember a single time in Berkshire’s history that we made an emotional decision,” Buffett said. “You don’t want to be an emotionless person your entire life, but you definitely want to be an emotionless person when making an investment or business decision.”
Warren Buffett, CEO of Berkshire Hathaway Inc, speaks with a reporter in the exhibit hall at the company’s annual meeting in Omaha, Nebraska, U.S. May 5, 2018. Portal/Rick Wilking
This strategy has worked for Berkshire Hathaway over the years. The conglomerate has outperformed the S&P 500 from 1965 to 2022 and weathered all sorts of ups and downs in the economy.
Buffett is known for his distinctive value-based investing philosophy, which involves buying and holding a core group of quality companies for long periods of time. Berkshire’s largest holdings are Bank of America (BAC), Apple (AAPL), Coca-Cola (KO), and American Express (AXP).
“It all comes down to the business,” Jonathan Boyar, another value investor, told Yahoo Finance Live about the investment approach. “Is it a good deal? Do you have a product or service that people want? And can it grow? Is there a large overall addressable market? And then it comes down to the rating. Buy it where at a low enough price? Do you have a margin of safety?”
“So whether you’re analyzing a big-cap stock or a small-cap stock, it’s the same path,” Boyar added. “Price is key, as is deal quality.”
Charlie Munger, Buffett’s longtime business partner, agreed with Buffett removing emotion from the decision-making process. At the same time, he noted later in the session that things could get tougher for value investors going forward.
“I think value investors are going to have a harder time now that so many of them are competing for a smaller number of opportunities,” Munger said. “My advice to value investors is to get used to making less.”
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