Warren Buffett is widely regarded as the greatest investor of all time. Had you invested $10,000 with Buffett back in 1965, your investment would now be worth somewhere around $90m. As a result, when Buffett speaks, fellow investors listen.
Buffett has never been shy in sharing his perspective on financial markets and for decades now, he’s held an annual meeting where he and his business partner, Charlie Munger, field all kinds of questions from investors. This year, the annual Berkshire Hathaway meeting took place on 5 May and as usual, Buffett and Munger didn’t hold back in answering shareholders’ questions honestly.
If you weren’t able to tune in, don’t despair. Here’s are some of the most valuable insights from the meeting.
Buffett kicked off the meeting by asking investors to guess how much a $10,000 investment in the US stock market on the day that he made his first stock purchase (at 11 years-old) back in 1942 would be worth today. The answer is approximately $51m. The lesson here? Time and compounding are incredibly powerful forces in investing. All an investor had to do was invest in the market, sit back and let the power of business work its magic.
Becoming a great investor
Buffett went on to say that investing doesn’t need to be complicated and that you don’t need a super high IQ to be a top investor. He advised that it helps to be disciplined and that there are a few fundamentals that are incredibly important, but that, in general, successful investing doesn’t require advanced learning.
In relation to individual stocks, Buffett said that he had regrets about not buying shares in Amazon and Google years ago, but that he was determined not to make the same mistake with Apple. He likes Apple’s brand power, and as a result, the tech stock is now the largest holding in his portfolio. “We’re betting on the success of Apple products like the iPhone, and I see characteristics in that that make me think it’s extraordinary,” Buffett commented. He also made it clear that he likes Apple’s massive cash pile and that he’s “delighted” that the company is buying back its own shares, as over time, that will increase his ownership of the company.
On the other hand, Buffett reinforced his bearish views on bitcoin and cryptocurrencies, stating that he would never invest in bitcoin and warning other investors against doing so. He reminded investors that any time you buy a “non-productive” asset which generates no earnings or cash flows, you are counting on someone buying the asset from you later on at a higher price, which is a risky strategy. Buffett advised that cryptocurrencies will “come to a bad ending,” and Munger agreed, stating that trading in cryptocurrencies is “just dementia.”
So the takeaways here are clear. If you want to invest like Buffett, focus on high-quality companies with strong brands and economic moats and invest for the long term. Oh, and stay away from bitcoin.
Edward Sheldon has no position in any shares mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (C shares), Amazon, and Apple. The Motley Fool UK has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.