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How to be the next Warren Buffett with ASX shares

warren buffett

One of the most successful investors in the modern era is the Oracle of Omaha, Warren Buffett.

Over the last few decades the legendary investor’s Berkshire Hathaway business has consistently generated market-beating returns for shareholders.

For example, at the end of last year, Berkshire Hathaway had recorded an annual average return of 20.5% since it began trading in 1965.

This means that even if you had just invested a modest $1,000 into the company in 1965, you would be sitting on a vast fortune today.

Based on a return of 20.5% per annum, that $1,000 investment would have grown to be worth a mammoth $23.6 million at the end of 2019.

How is this possible?

Mr Buffett hasn’t achieved this by taking moonshots on speculative companies like BrainChip Holdings Ltd (ASX: BRN) or Novonix Ltd (ASX: NVX). He has achieved it by using a relatively simple investment strategy – buy and hold investing.

The Berkshire Hathaway boss looks to buy shares in companies with strong business models, competitive advantages, talented management teams, and positive long-term outlooks.

He then holds onto them for a long period of time (unless the investment thesis breaks) and lets the power of compounding do the rest.

How can you replicate his success?

There’s nothing to stop readers from following in Warren Buffett’s footsteps and investing this way. All you need to do is look for those quality companies that you can invest in with a long term view.

The good news is that there are a good number of companies on the All Ordinaries Index (ASX: XAO) which I believe have the potential to generate strong returns for investors over the next decade and beyond.

For example, electronic design software company Altium Limited (ASX: ALU) looks well-positioned for growth. This is thanks to its exposure to the rapidly growing internet of things and artificial intelligence markets.

Another company that could grow strongly over the next decade and beyond is Cochlear Limited (ASX: COH). Ageing populations look set to drive increasing demand for its implantable hearing devices over the 2020s.

Finally, Pushpay Holdings Ltd (ASX: PPH) is a donation management and community engagement platform. It stands to benefit greatly from the shift to a cashless society and the digitisation of churches. As a result, I think it could be a long term market beater.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

James Mickleboro 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 Altium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and PUSHPAY FPO NZX. The Motley Fool Australia has recommended Cochlear Ltd. and PUSHPAY FPO NZX. 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.

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