Legendary investor Warren Buffett is set to retire at the end of this year, but the billionaire and CEO of Berkshire Hathaway leaves behind a wealth of knowledge and sage advice.
One piece of advice he’s not sure people will follow, however, is his signature strategy: value investing. It’s a practice that requires time and patience — but it pays off. Buffett’s current net worth is around US$150 billion (R$800 billion), and Berkshire Hathaway’s current market capitalization is impressive: US$1 trillion (R$5.33 trillion). (Along with Saudi Aramco, it is the only company in the world with a valuation above $1 trillion that is not in the technology sector.)
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Value investing involves looking for companies trading below their intrinsic value and targeting quality businesses with strong growth potential, solid leadership and an “economic moat” — an expression coined by Buffett to refer to a company’s long-term competitive advantage.
During his 60 years at the helm of Berkshire Hathaway, Buffett remained (for the most part) true to this focus on value investing. (Buffett has invested in big tech companies like Apple, although Berkshire Hathaway has dumped a significant amount of those shares.)
This started with investments in brand-name companies like Coca-Cola and Geico that would generate consistent returns, as well as insurance companies that would generate a lot of cash for reinvestment. Buffett also defended the idea of only investing in businesses that make sense for him.
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“Never invest in a business you can’t understand,” Buffett once said. He also stated that this strategy allows you to know in “five minutes” whether an investment is worth it.
While value investing has brought Buffett great success throughout his career, it is a practice that requires a lot of time and patience because it involves identifying companies trading below their intrinsic value — and waiting for markets to recognize and correct this undervaluation. This is why so few people follow this practice.
In fact, Amazon founder and fellow billionaire Jeff Bezos once asked Buffett why so few copy his investing approach, according to Airbnb CEO Brian Chesky.
He said on The Carlos Watson Show that he was having lunch with Buffett and Bezos, and when Bezos asked that question, Buffett responded: “Because nobody wants to get rich slowly.”
And that’s especially difficult today, in an era where instant gratification reigns supreme, and strategies like day trading and investing apps have become more popular. Companies seem to fear being labeled as “value” stocks and insist on being classified as “growth” stocks.
“Life is like a snowball,” Buffett once said, according to the book “The Snowball: Warren Buffett and the Business of Life”, a biography written by Alice Schroeder. “The important thing is to find wet snow and a really long hill. And I’m not just talking about compound interest. It’s about understanding the world and what kind of friends you accumulate.”
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Of course, Buffett’s advice may seem antiquated—or made for a very different era than the one in which today’s stock market moves and operates. Especially in the age of AI, inflation and tariffs, stocks can move very quickly, making it extremely difficult to know where to invest.
Still, Buffett advocates not acting for the sake of acting — but values patience: “The stock market is a mechanism for transferring money from the impatient to the patient.”
“When in doubt, keep holding on,” he said. “I made most of my money just waiting.”
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