The Motley Fool

Forget gold and Bitcoin. I’d follow Warren Buffett’s advice in 2021

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

close-up photo of investor Warren Buffett
Image source: The Motley Fool

The rising prices of Bitcoin and gold may persuade some investors to ignore Warren Buffett’s strategy of buying undervalued shares for the long run. After all, the virtual currency and precious metal are extremely popular at the present time. And they could even move higher over the coming months.

However, they also come with risks that could derail their progress. As such, a simple buy-and-hold strategy that focuses on UK shares trading at cheap prices may provide greater scope for capital growth in the long run.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Warren Buffett’s views on Bitcoin and gold

Warren Buffett is known to have a negative viewpoint of gold and Bitcoin. Although both assets have risen sharply in price in recent weeks, they may fail to deliver similarly fast-paced growth in the long run.

Gold, for example, is now trading close to a record high. Investors may have factored-in the prospect of a weak global economic performance in the first half of the year. Furthermore, the rollout of vaccines may mean that the prospects for the economy improve significantly over the coming months. This may cause many investors to pivot from gold to undervalued shares. And that may lead to a disappointing relative performance from the precious metal.

Similarly, Warren Buffett does not invest in Bitcoin. One of the potential threats to its performance is the fact that it has no fundamentals. This means that investors cannot gauge whether it offers good value for money, or is overvalued. It also has regulatory risks and may lack the necessary infrastructure to replace traditional currencies. It all means its future prospects could be less attractive than many investors currently believe.

Investing in undervalued UK shares

While Warren Buffett is negative about gold and Bitcoin, his views on buying undervalued shares have been consistent over many years. His wealth has been built on a simple strategy that seeks to buy high-quality companies when they face short-term challenges that lead to low share prices. Buying such companies can produce higher returns than the wider market, since an investor is buying a high-quality business at a discount to its intrinsic value.

At the present time, a number of FTSE 350 shares appear to be undervalued. Sectors such as energy, financial services and media are facing difficult operating conditions that are holding back their performances. This may remain the status quo in the next few months, of course. But an economic recovery seems likely long term. This could lead to a stronger operating environment for such businesses that allows them to command higher share prices.

As such, now could be the right time to follow Warren Buffett’s advice. There appear to be many opportunities to capitalise on recent stock market falls to produce high returns in the coming years that may be ahead of those offered by Bitcoin or gold.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.