“Be emotionless” in business

Finance


At Berkshire Hathaway’s (BRK-A, BRK-B) annual shareholder meeting on Saturday, Warren Buffett gave investors his usual tip on how he could become one of the hottest investors. showed.

One of the keys: don’t get emotional. At least in business matters.

“In the history of Berkshire, I can’t remember a time when we made an emotional decision,” Buffett said. Sometimes you want to be emotionless.”

Warren Buffett, CEO of Berkshire Hathaway, speaks with reporters in the exhibit hall during the company's annual meeting in Omaha, Nebraska, USA, May 5, 2018.  REUTERS/Rick Wilking

Berkshire Hathaway CEO Warren Buffett speaks with reporters in the exhibit hall during the company’s annual meeting in Omaha, Nebraska, USA, May 5, 2018. REUTERS/Rick Wilking

This strategy has worked for Berkshire Hathaway for many years. The conglomerate has outperformed the S&P 500 from his 1965 to his 2022 and weathered all kinds of ups and downs in the economy.

Buffett is known for his signature value-oriented investment philosophy, which consists of buying and holding a core set of quality companies for an extended period of time. Berkshire’s largest holdings are Bank of America (BAC), Apple (AAPL), Coca-Cola (KO) and American Express (AXP).

“It’s all about the business,” fellow value investor Jonathan Boyar told Yahoo Finance Live about his investment approach. “Is it a good business? Do they have a product or service that people want? And can it grow? Is there a large market that can be addressed? And it comes down to valuation. Do you have a safe margin?”

“So the analysis is the same for large-cap and small-cap stocks,” Boyard added. “The price is very important, as is the quality of the business.”

Buffett’s longtime business partner Charlie Munger agreed with Buffett on removing emotion from the decision-making process. At the same time, he said later in the conference that things could get tougher for value investors going forward.

“I think we are going through a tough time right now as many value investors are competing for a reduced set of opportunities,” Munger said. “My advice for evaluating investors is to get used to lower returns.”

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