How Warren Buffett is influencing my investing today

Warren Buffett's approach to investing is heavily influencing my thoughts today. These are some of the main lessons.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Warren Buffett is perhaps the greatest investor in the world.

He has kindly spent most of his life sharing his investment knowledge for free with the world. Many people don't like following his (or Charlie Munger's) advice because it's too basic and they don't have enough patience.

There are a number of things that he has said in the past that is influencing my investing today:

"Anything can happen"

Hanging on the walls in Berkshire Hathaway's office are old newspapers with headlines on days during painful economic times. As an example, one of those newspapers is from 1929 when share prices collapsed which started the Great Depression. He was actually born during that time. Warren Buffett says he likes them there to remind him that anything can happen. 

I'm certainly not saying that coronavirus is going to start a depression. I think it's a good reminder to know that the share market will go through these big bumps very occasionally. But historically the share market eventually recovered after a few months or a few years.

"Buy American. I am"

Over a decade ago Warren Buffett wrote a piece in the New York Times. He said that financial problems were leaking into the general economy, that business activity would falter and that headlines will continue to be scary.

But a simple rule dictated his buying: "Be fearful when others are greedy, and be greedy when others are fearful."

Indeed, his comments in the article could definitely be applied to today's share market situation: "And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation's many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now… I haven't the faintest idea as to whether stocks will be higher or lower a month  or a year  from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over."

He was brave during through the turbulent times and it paid off strongly after a few years.

Rule 1: Never lose money

And rule number 2: Don't forget rule number 1.

This isn't the time to be going after businesses with risky balance sheets in my opinion. I like to invest in shares that are likely to stand the test of time, or at least a decade. Some of the shares that I want to hold in my portfolio for many years to come that could be solid buys today are: Altium Limited (ASX: ALU), Magellan Global Trust (ASX: MGG), WAM Microcap Limited (ASX: WMI) and Future Generation Investment Company Ltd (ASX: FGX).

Shares that I don't own but I think could be solid long-term buys are Brickworks Limited (ASX: BKW), APA Group (ASX: APA), Cleanaway Waste Management Ltd (ASX: CWY) and REA Group Limited (ASX: REA).

Motley Fool contributor Tristan Harrison owns shares of Altium, FUTURE GEN FPO, MAGLOBTRST UNITS, and WAM MICRO FPO. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Brickworks and REA Group Limited. 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.

More on ⏸️ Best Investors

⏸️ Famous Investors

Is Warren Buffett already planning for the next market crash?

Warren Buffett’s vast cash position suggests that he is continually ready to capitalise on the next stock market crash, in…

Read more »

Value Investing

Forget gold and Bitcoin. I'd follow Warren Buffett's advice after the stock market crash

Warren Buffett’s strategy of buying high-quality shares at low prices after a stock market crash could lead to higher returns…

Read more »

asx shares investing experts represented by blocks spelling the word expert
⏸️ Best Investors

Worried about a second stock market crash? I'd start investing like Warren Buffett

Warren Buffett’s value investing style could help you to overcome and even benefit from a second stock market crash in…

Read more »

⏸️ Best Investors

Should your share portfolio actually be 50% cash right now?

Should half of your share portfolio actually be cash right now? That’s what MFF Capital Investments Ltd (ASX:MFF) has done…

Read more »

⏸️ Best Investors

Warren Buffett says investing in airlines was a mistake

Warren Buffett has said that investing in airlines was a mistake. What does this mean for Qantas Airways Limited (ASX:QAN).

Read more »

a woman
Coronavirus News

How to invest in ASX shares like Warren Buffett

Warren Buffett is one of the greatest investors of all time. Here is how to apply his investing approach to…

Read more »

a woman
⏸️ Best Investors

Top global fund manager says buy a few shares

Top global fund manager Howard Marks says to buy shares because of the coronavirus, but not too many in-case there…

Read more »

a woman
⏸️ Best Investors

2 Warren Buffett quotes to live by on the ASX

Here are two Warren Buffett quotes to live by on the ASX.

Read more »