Warren Buffett on value investing

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garlandwhizzer
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Joined: Fri Aug 06, 2010 3:42 pm

Warren Buffett on value investing

Post by garlandwhizzer » Wed Dec 05, 2018 3:58 pm

An interesting article on the CNBC website that details Buffett's idea of what actually constitutes value investing and how difficult it is to find it. Article, well worth reading IMO.

https://www.cnbc.com/2018/12/05/warren- ... value.html

Excerpt from article:

"Most analysts feel they must choose between two approaches customarily thought to be in opposition: 'value' and 'growth.' ... We view that as fuzzy thinking … Growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive. ... In addition, we think the very term 'value investing' is redundant. What is 'investing' if it is not the act of seeking value at least sufficient to justify the amount paid? Consciously paying more for a stock than its calculated value — in the hope that it can soon be sold for a still-higher price — should be labeled speculation (which is neither illegal, immoral nor, in our view, financially fattening)."

Buffett added that a low ratio of price to book value, a low price- earnings ratio, or a high dividend yield, "even if they appear in combination, are far from determinative as to whether an investor is indeed buying something for what it is worth and is therefore truly operating on the principle of obtaining value in his investments."

Garland Whizzer

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