Warren Buffett is widely regarded as one of the greatest investors of all time, and his latest letter to Berkshire Hathaway shareholders once again provided valuable insights for investors worldwide.
One quote that stood out was as follows:
Understandably, really outstanding businesses are very seldom offered in their entirety, but small fractions of these gems can be purchased Monday through Friday on Wall Street and, very occasionally, they sell at bargain prices.
We are impartial in our choice of equity vehicles, investing in either variety based upon where we can best deploy your (and my family's) savings. Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities.
This quote perfectly captures the essence of Buffett's investment philosophy—waiting patiently for truly outstanding businesses to trade at fair prices, rather than simply chasing any old stock that appears cheap.
Applying this principle to ASX shares could be a smart move for long-term investors looking to build real wealth.
Quality over perceived value
One of Warren Buffett's most famous sayings is that "it's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." This is a principle that ASX investors should keep in mind when constructing their portfolios.
There are always businesses that appear to be trading at cheap valuations, but that doesn't necessarily make them great investments.
Instead, investors should be focusing on truly high-quality businesses—companies with strong competitive advantages, resilient earnings, and long-term growth potential. The key is to wait for these companies to trade at fair valuations, rather than jumping into stocks that appear to be cheap but lack enduring business quality.
Some high-quality ASX Shares worth watching
With the above in mind, it is worth noting that there are a number of ASX shares that could be worth considering for investors wanting to replicate Buffett's investment style.
These shares are out of favour due to temporary headwinds but could represent compelling long-term opportunities.
CSL Ltd (ASX: CSL)
CSL is one of the highest-quality healthcare companies in the world, with an industry-leading plasma business. Its shares have been under pressure due to short-term margin pressures and the underperformance of its vaccines business, but its long-term growth potential remains intact. With global demand for plasma-derived therapies continuing to rise, CSL looks like a classic Buffett-style investment—an outstanding business that is temporarily trading at a reasonable valuation.
Domino's Pizza Enterprises Ltd (ASX: DMP)
Domino's has faced challenges in recent years, including cost pressures and weaker consumer sentiment in key markets. However, the company has a long history of strong earnings growth and an expanding global presence.
Investors willing to look past short-term volatility could be rewarded as Domino's refines its operations and continues its long-term expansion strategy. Especially given the much-needed management refresh and the closure of underperforming stores.
WiseTech Global Ltd (ASX: WTC)
This logistics software giant's have pulled back materially from highs in recent months due to concerns over the behaviour of its CEO and founder and a subsequent board fallout.
However, WiseTech continues to dominate the global freight management space, benefiting from industry-wide digital transformation. With its recurring revenue model and global growth potential, it remains a high-quality business with significant long-term upside.
Foolish takeaway
Buffett's advice suggests that investors should avoid rushing into investments just because a stock looks cheap or because they feel pressured to act.
Instead, they should take a disciplined approach, building a portfolio filled with truly outstanding businesses. By waiting for high-quality ASX shares to trade at attractive levels, investors can position themselves for long-term success.
While the market will always have its ups and downs, sticking to Buffett's principles of patience, selectivity, and quality could be the best way to build real wealth through ASX shares.
