Doing something for many decades gives an investor experience and perspective. Super-investor Warren Buffett has been buying shares for many years – and it has helped him become a billionaire.
I use some of the Buffett method when choosing shares to buy. But how well can it really work in 2023, a very different era to when he first started buying shares?
Times have changed
A lot of things have changed since Buffett bought his first share in the 1940s. He has reminisced about some of the bargains available early in his career that have long since vanished.
In the first decade of his investment vehicle, Berkshire Hathaway, its per-share market value grew at an average of 18.9%. In the most recent decade, that figure has been a more modest (but still impressive) 15.5%.
But the changes seen in the past few decades can work to my advantage as an investor. For example, early in Buffett’s career, if he wanted to find certain information he had to dig around in a public library for it. Now I can access a world of corporate and financial information for free online. That can help me get the information I need to make investment decisions.
On top of that, Buffett has said he reckoned it was easier for him to make outsized returns when he was investing far smaller sums. That is music to the ears of a private investor like myself!
Investing like Buffett
Not only that, but the approach that made Buffett rich continues to work well now, I reckon.
For example, consider what has arguably been his biggest gaining investment of his whole career, Berkshire’s stake in Apple. That cost the firm $31bn but was valued at $161bn at the time of Berkshire’s most recent annual letter. While Buffett has owned shares that showed a bigger percentage gain, in pure cash terms, Apple has been the best performing share of his career, so far.
Yet Buffett only started buying Apple shares in 2016. The company matches many of his classic investment principles. It is in a business sector that will likely see strong future demand. Its brand and installed user base give it a powerful competitive advantage, helping Apple make large profits.
While customer trends and industrial technology has evolved over the decades, I think the Buffett approach to finding great shares remains valid.
Investing to build wealth
So can using the Buffett method help me get rich in 2023 and beyond? The answer to that depends on a couple of things. First, does his approach still work? As I explained above, I think it can do.
Secondly though, I need to invest money. Simply identifying great shares using his methodology will not help me improve my financial position unless I put some money into them.
I do not have massive funds to invest like Buffett does. But I can begin with what I have and hope that, over time, I can grow my riches by following his time-tested investing methodology.
