Business

‘Be emotionless’ in business


At Berkshire Hathaway’s (BRK-A, BRK-BUILD) Annual shareholders meeting on Saturday, Warren Buffett addresses investors with his usual advice on how he became one of the advance investor.

One key: Don’t be emotional — at least in business matters.

“I can’t remember any time in Berkshire’s history when we made an emotional decision,” Buffett said. “You don’t want to be emotionless your whole life, but you definitely want to be someone who’s emotionless when it comes to making investment or business decisions.”

Warren Buffett, CEO of Berkshire Hathaway Inc, speaks to a reporter in the gallery at the company's annual meeting in Omaha, Nebraska, U.S., May 5, 2018. REUTERS/Rick Wilking

Warren Buffett, CEO of Berkshire Hathaway Inc, speaks to a reporter in the gallery at the company’s annual meeting in Omaha, Nebraska, U.S., May 5, 2018. REUTERS/Rick Wilking

That strategy has worked for Berkshire Hathaway for years. The group outperformed the S&P 500 from 1965 to 2022 and weathered every challenge. ups and downs in the economy.

Buffett is known for his signature value-driven investing philosophy, which involves buying and holding a core group of quality companies over the long term. Berkshire’s largest holdings include Bank of America (NORTH), Apple (AAPL), Coca-Cola (KO) and American Express (AXP).

“It all comes down to business,” fellow value investor Jonathan Boyar tell Yahoo Finance Live investment methods. “Is it a good business? Do they have a product or service that people want? And can it grow? Is there a big market that can be addressed? And then there’s the pricing. Do you buy it cheap enough? do you have a margin of safety?”

“So whether you’re analyzing large-cap stocks or small-cap stocks, it’s the same thing,” adds Boyar. “Price is critically important as is business quality.”

Charlie Munger, Buffett’s longtime business partner, agreed with Buffett on removing emotions from the decision-making process. At the same time, he noted later in the meeting that there could be more challenges for value investors going forward.

“I think it’s harder for value investors when there are so many of them vying for a narrow range of opportunities,” says Munger. “My advice to value investors is to get used to making less money.”

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