August 26, 2014
Warren Buffett, otherwise known as the Oracle of Omaha, is one of the richest men in the world and arguably one of the greatest investors of all time. He has built his fortune using a simple, yet, powerful investment strategy; buy quality companies with strong management, and give those companies time to earn their profits. Below I have listed some quotes from Warren Buffett that have helped mold my investment strategy.
1."It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." Focus on quality and look for companies whose products or services are in great demand and will continue to be in great demand. Let's face it, when we're in a recession we still take showers, we still eat food, and every month we still pay our phone and utility bills.
2. "Be fearful when others are greedy and greedy when others are fearful." It is never a straight line to the top; even the greatest companies have bumps along the way. It is important to assess the situation, if the hiccup is a structural flaw of the company then it may not be a good investment. But if it is caused by external forces that the organization can't control, it can often signal an excellent buying opportunity.
3. "When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever." Think long-term; you don't want a portfolio that will take you to retirement, instead, it is important to have a portfolio that will last through your retirement. Give the companies you own time to earn their profits and in turn, share those profits with you through dividends and price appreciation.
Investing isn't black and white. Find a style that you are comfortable with and makes sense to you and stick with it. Buying quality companies with consistently increasing cash-flows and strong future growth prospects is an excellent way to build wealth over time.
Ethan Wade, Financial Advisor
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).