Everyone wants to know how to invest like Warren Buffett. The ‘Oracle from Omaha’ has been one of the most successful investors ever. He’s built up his multi-billion dollar fortune by buying undervalued shares in companies with real growth potential.
It’s easy to imagine this strategy requires complicated algorithms and a touch of magic. The reality, however, is that Warren Buffett is human. In fact, his investment philosophy is actually very simple.
The man is known for his long-term investment horizon and ability to make calculated bets. If you want to know how to invest like Warren Buffett today, read on…
How to invest $1,000 like Warren Buffett today
I think it’s best to start with some quotes from the man himself. One of my personal favourites is, “Widespread fear is your friend as an investor because it serves up bargain purchases.”
It’s hard to think of something more appropriate to the current environment. COVID-19 shutdowns and an oil price war have smashed ASX share prices lower in 2020. In fact, the S&P/ASX 200 Index (ASX: XJO) is down 19.79% and that certainly has investors feeling fearful.
For every headline about a quick recovery there’s another about the impending end of the world. Personally, I think there’s still some short-term economic pain to come, but there are also some high-quality companies on sale right now.
If you want to invest like Warren Buffett today, there could be some ASX shares in the buy zone right now. One example the legend himself might like the look of is BHP Group Ltd (ASX: BHP). BHP’s shares have slumped 20.62% in 2020 and, I believe, could be undervalued. Particularly if we see Chinese demand continue to grow and more investment in Aussie infrastructure by the federal and state governments.
If you want to invest like Warren Buffett, buying undervalued shares is a great way to do it. Which brings me to another Warren Buffett quote I love: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
As such, just because shares in companies like Southern Cross Media Group Ltd (ASX: SXL) are down over 70% in 2020, this doesn’t necessarily make them a bargain. Many businesses are doing it tough right now and, whilst some will be undervalued, buying distressed companies could be a whole new ball game for the average Aussie investor.
Foolish takeaway
There are buying opportunities available to savvy investors at the moment. If you want to invest like Warren Buffett, remember to only look for companies with a long-term perspective.
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Returns as of 6/5/2020
More reading
- Why I’d buy and hold Telstra shares for a decade
- ASX 200 down 0.9%: Xero posts strong growth & Australian economy loses 594,300 jobs
- Should you cash out of this ASX 200 rally?
- This ASX 200 share is rocketing higher after delivering more strong sales growth
- David Tepper believes we’re in the biggest stock bubble since 1999
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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