Warren Buffett on the investing strategy ‘you can learn in the fourth grade,’ but is ‘not taught in schools’
Buffett said that he, longtime business partner Charlie Munger and other Berkshire Hathaway executives have long used this strategy because it has a higher chance of return, and it alleviates some of the pressure of trying to predict the stock market. If the value of a stock dips after you buy it, Buffett noted, that means its shares have become less expensive — so buy more of them (THH: Price to Value gap).
“We haven’t the faintest idea what the stock market is going to do when it opens on Monday (THH: No point in trying to guess share price tomorrow, next week or even month since it is impossible to know so don’t even think about it) ,” Buffett said. “We’ve not been good at timing. We’ve been reasonably good at figuring out when we were getting enough for our money.” (THH: They make money on undervalued companies they buy when the market goes from a voting machine to a weighing machine which can take months or years)
Using this strategy to navigate the stock market instead of trying to predict it, Buffett said, is almost like having an insurance policy in an often volatile market (THH: Margin of Safety thanks to Price being lower than Value). Twice, he said, he’d tried to predict the market ahead of time — once in 2008 during the Great Recession, and again in March 2020 ahead of the Covid-19 pandemic crippling global markets.
Those decisions cost Berkshire Hathaway billions of dollars, he said.”Another billionaire has apparently followed a similar playbook: Tesla and SpaceX CEO Elon Musk, currently the world’s richest person. On Sunday, Musk tweeted a piece of familiar investing advice: “Buy stock in several companies that make products [and] services that you believe in . Only sell if you think their products [and] services are trending worse (THH: “The product” in our case is the junior miner’s project(s)). Don’t panic when the market does.”
