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How to invest in ASX stocks like Warren Buffett

Warren Buffett is generally regarded as one of (if not the) greatest investors of all time. His company Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) has made countless investors extremely wealthy over the past 50 years, with a book value growth rate that has exceeded 20% per annum since 1965.

Needless to say, we could all probably learn a thing or two about investing from this proven master.

Unfortunately, most of us don’t have a direct line to Mr Buffett to seek his counsel. Fortunately, Buffett is very generous with publicly sharing his investing process, thoughts and knowledge – which give us an opportunity to attempt to copy some of his successful habits.

So here are 3 ‘Warren Buffett’ ways you can improve your investing calibre.

Only buy stocks you plan to hold forever

One of Buffett’s more famous tips is ‘[i]f you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.’

Buffett only buys a stock if he thinks that company’s competitive advantages are durable enough to see it succeed for decades to come. It’s hard to argue with his logic as 2 of Buffett’s earliest investments – Coca-Cola and American Express Co. – are reaching new heights even today.

So keep this tip in mind if you are planning on buying a less-than-stellar ASX business for a short-term gain.

Find ASX companies with powerful brands

Warren Buffett loves a good brand. It’s a theme that weaves its way through his entire investing career. Chances are if an American company has a well-known brand, Buffett has either owned it or at least thought about owning it.

If you go back through Buffett’s portfolio, you will see names like Coke, Gillette, Duracell, Mastercard and of course Apple pop up. All of these companies have a unique, highly recognisable and powerful brand that makes them desirable for Buffett to own.

So have a think about which ASX companies have something similar going for them. You might find yourself a future winner.

Wait for the right time to strike

Buffett is famous for his patience and loves to buy a company when its stock price is at a low point – or as he likes to call it, ‘on sale’. Buffett is always buying heaviest when there’s a crash or recession in progress – many of his current holdings were bought or topped-up during the GFC.

Having some Buffett-style cash on the sides ready and waiting is a great way to enhance your portfolio’s returns, in my opinion.

Foolish takeaway

I have always said that one of the best ways to improve your own investing is to look at how the greats do it (which is not too difficult in our modern world).

Whilst Warren Buffett is a rare breed of genius, many of his investing principles are simple in nature and accessible to anyone.

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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short January 2020 $220 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.