Investing

The investment strategy that's still making Warren Buffett rich

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Warren Buffett and CNBC's Becky Quick at the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska, April 29, 2022.
David A. Grogan | CNBC
Key Points
  • Berkshire Hathaway CEO Warren Buffett reiterated to an audience of tens of thousands of investors on Saturday at the company's annual shareholder meeting that he has stuck to his successful value investing strategy.
  • "We haven't the faintest idea what the stock market was gonna do when it opens on Monday," Buffett said. "We have not been good at timing. We've been reasonably good at figuring out when we were getting enough for our money."

Warren Buffett, the legendary 91-year-old investor and Berkshire Hathaway CEO, is still living by the investment advice he's been preaching for decades: Purchase stocks of companies you understand and see value in for the long term.

At Berkshire Hathaway's annual shareholders meeting Saturday, the Oracle of Omaha answered questions alongside Berkshire's vice chairman, Charlie Munger. He reiterated to an audience of tens of thousands of investors that he has stuck to his value investing strategy, which focuses on a company's potential to succeed as a business and deliver returns into the future.

"Nobody buys a farm based on whether they think it's going to rain next year," Buffett told CNBC's "Squawk Box" in 2018. "They buy it because they think it's a good investment over 10 or 20 years."

That strategy is working. From 1965 through the end of 2021, Berkshire shares have generated a compound annual return of 20.1% against 10.5% for the S&P 500. Over the past 20 years, Berkshire is a percentage point ahead of the S&P 500 with a 10.3% annualized return against 9.2% for the index, according to calculations by Barron's.

Investing successfully is not about timing the market

"We have not been good at timing. We've been reasonably good at figuring out when we were getting enough for our money," Buffett said Saturday. Which is something experts suggest average investors do, too.

Especially "for young investors, it's not about timing the market. It's about time in the market," Marguerita Cheng, a certified financial planner and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland told Grow last year.

If you're a long-term investor, Buffett's advice is to invest in companies you believe in.

Because investors can "make decisions every second with stocks," as opposed to investing in a physical entity like stores or farms, "they think an investment in stocks is different than an investment in a business. But it isn't," Buffett said on CNBC's "Squawk Box" in 2018. 

At the 2022 shareholder meeting over the weekend, Buffett reiterated that he ignores the chatter and resists the temptation to predict the future.

"We haven't the faintest idea what the stock market was gonna do when it opens on Monday," Buffett said in response to an audience question. "I don't think we've ever made a decision where either one of us has either said or been thinking we should buy or sell based on what the market is going to do, or for that matter, on what the economy's going to do. We don't know."

Instead, he invests in companies he believes in over the long term.

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