Legendary investor Warren Buffett is set to retire at the end of this year, but the billionaire Berkshire Hathaway CEO 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 takes time and patience—but pays off. Buffett’s current net worth is about $150 billion, and Berkshire Hathaway’s current market capitalization is a whopping $1 trillion. (Along with Saudi Aramco, it is the only company in the world with a $1 trillion–plus valuation that is not a tech firm.)
Value investing involves searching for companies trading below their intrinsic value and aims for quality businesses with strong growth potential, solid leadership, and an “economic moat”—a phrase coined by Buffett referring to a company’s long-term competitive advantage.
During his 60-year run at Berkshire Hathaway, Buffett has stayed (mostly) true to this value investing focus. (Buffett did invest in major tech companies like Apple, although Berkshire Hathaway has shed a significant amount of those shares.) This started with investments in branded companies like Coca-Cola and Geico that would reliably generate good returns, as well as insurance companies that would generate plenty of cash to reinvest. Buffett also championed the idea of only investing in businesses that made sense to him.
