Recently, as we start each week afresh, I’ve been drawing inspiration from the great investor, Warren Buffett. As you are no doubt already aware, Buffett is the Chair and CEO of Berkshire Hathaway Inc. (NYSE: BRK.A) (NYSE: BRK.B) and arguably the world’s most successful investor. Our Motley Fool colleagues over in the United States have put together a comprehensive list of Buffett’s best quotes, which you should definitely check out when you have time.

But here are 3 quotes that I think have particular wisdom worth absorbing this week!

“For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favourable business developments”

Here Buffett is warning about the dangers of assuming you can pay any price for a top-notch company. I believe investors often fall into this trap. When they see a company that is growing fast, they figure it’s better to buy the overvalued shares than miss out entirely. In my opinion, we have seen this play out recently with WAAAX shares like Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO). While buying into a winning company can feel good for a while, Buffett is warning that paying an overinflated price can lead to a path of wealth destruction in the end.

“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage”

This Warren Buffet quote is a great lesson for us all to keep in mind. Some investors often assume that just because a company is a ‘disruptor’, this automatically makes it a good investment. Disrupting an industry can be a winning strategy, but only if the company is able to hold on to its ‘moat’, or competitive advantage.

Just take Nokia, for example. This company pioneered mobile phones back in the day, but today is not really around to keep extracting its share of the spoils. That honour belongs to the likes of Apple, Alphabet and Samsung. These are all companies that could do what Nokia did, only better. No wonder Warren Buffett owns shares of Apple.

“Predicting rain doesn’t count, building the ark does”

I think this Warren Buffett quote is particularly relevant in 2020. This is a year that has already brought unprecedented volatility to our share market. There’s always a conga-line of doomsayers ready to tell you when the next share market crash or recession is about to hit. As Buffett also espouses, however, it doesn’t matter how right they are, but how you prepare for it. Remember, even a broken clock is right twice a day! 

Foolish takeaway

Recessions and market crashes have often resulted in Warren Buffett becoming richer. Now that’s something I think we could all draw inspiration from in the current climate. 

More reading

• Why the Zip Co share price rocketed 57% higher in May
• This ASX fintech share is up 489% since March
• Why Nearmap’s share price surged by 50% in May
• Openpay share price surges 29% higher after BNPL provider reports record month
• Real wealth from 3 roaring mid caps in May

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and 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 June 2020 $205 calls on Berkshire Hathaway (B shares). The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. The Motley Fool Australia has recommended Alphabet (A shares) and 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.

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Australia has a vibrant and fast-growing small cap ASX tech sector. Here’s a closer look at 5 small cap ASX tech shares that saw stellar share price growth of between 30% and 70% during May.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is a donor management platform provider for faith and not-for-profit sectors. The company operates in the large-to-medium church sector of the US market.

Pushpay’s growth has been strong over the past few years. Recently, the company indicated that further high growth is predicted for FY 2021.

May was a particularly strong month, with the Pushpay share price up by a massive 69%. Demand for its platform has recently accelerated, due to closure of many churches across the US.

Redbubble Ltd (ASX: RBL)

Redbubble owns and operates leading global marketplaces for independent artists. In a market update back in April, Redbubble revealed it believes that it is well placed to endure through the coronavirus outbreak.

Redbubble also reported that it remains in a strong financial position and its operations and supply chain remain resilient.

The Redbubble share price soared 57% in May, which follows a share price rally that began in late March.

Tyro Payments Ltd (ASX: TYR)

Tyro provides Australian businesses with payment solutions for credit and debit card transactions. As such, Tyro is set to benefit from the easing of lockdown restrictions in Australia.

Renewed optimism in the reopening of the Australian economy helped to see its share price rise by 32% during May.

A series of positive market updates during May also indicated that Tyro’s transaction values have continued to improve.

Data#3 Limited (ASX: DTL)

Data#3 is an Australian ICT provider that provides a range of technology solutions. These include cloud and data centre services, mobility, security and data and analytics solutions.

An April market update revealed that there had been no significant impact on its business operations due to the pandemic. The company is also so far on track to meet its full year financial year objectives.

Its share price rose strongly by 37% during May. I believe that this strong growth was driven in particular by growing demand for cloud and data centre solutions, because remote working has increased during the pandemic.

EML Payments Ltd (ASX: EML)

EML Payments is an electronics technology solutions provider for gift cards and pre-paid cards.

Prior to the coronavirus crisis, it had been growing strongly for several years.

Its share price was hit hard in the early part of the crisis, however EML shares have since bounced back strongly.

May was a particularly strong month, with the EML share price rising by 30%. Investors appear to be encouraged by the easing of lockdown restrictions. This should see demand for its services begin to get back to normal.

More reading

• Why Nearmap’s share price surged by 50% in May
• Top ASX Stock Picks for June 2020
• 10 top ASX growth shares to buy in June for strong returns
• How to make $1,000 a month in dividends
• Build wealth for life with these 2 ASX 200 shares

Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited and Tyro Payments. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia has recommended Data#3 Ltd., Emerchants Limited, and REDBUBBLE FPO. 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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