Warren Buffett is one of the most successful investors of all time. He has been able to generate market-beating returns on a consistent basis over a long period. This has enabled him to become one of the richest people on earth.
His investment style focuses on purchasing undervalued companies. With the FTSE 350 appearing to offer a wide range of businesses that trade at significantly lower price levels than they have done in the past, there could be numerous opportunities for value investors to capitalise on them.
Furthermore, with other popular assets such as cash and bonds seeming to offer unfavourable risk/reward ratios, now could be the right time for you to focus your capital on the stock market.
Buffett’s track record
As mentioned, Warren Buffett has been able to deliver consistently high returns over a long time period. He has been able to achieve this through using a simple methodology, which can be executed by almost any investor. Therefore, even though the stock market has experienced a decade-long bull market, his strategy could offer significant returns for long-term investors.
Even if there is a bear market in 2020 and investors experience a disappointing year, Buffett’s investment strategy could be a useful ally. He has a successful track record of purchasing shares when other investors are concerned about the near-term prospects for the economy. As such, however 2020 turns out from an investment performance perspective, keeping an eye on how Warren Buffett reacts in terms of his purchases and sales could be a good idea.
Buffett has focused his capital on the stock market rather than other mainstream assets such as cash and bonds. This has provided him with access to higher growth rates that have, in turn, boosted his financial standing over previous decades.
With interest rates expected to stay low in 2020, the opportunities to generate a high return may be more readily available within the stock market versus other asset classes. Therefore, focusing your capital on equities and following a value investment strategy could prove to be a far more rewarding move than holding large sums of cash or accepting lower returns in fixed income assets.
Of course, risks such as Brexit and a US/China trade war could mean that there are a wide range of value investing opportunities already available within the FTSE 350. In many cases, investors have priced in a potential slowdown in growth in 2020, with this being reflected via lower valuations across a number of different sectors.
In some cases, such companies offer economic moats and strong long-term growth opportunities. Since Warren Buffett has focused on those areas when investing his own capital in the past, doing likewise with your own capital could be a shrewd move. It may enable you to improve your financial future, and in doing so emulate the past performance of Warren Buffett.
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.