Warren Buffett's investment strategy centres on buying quality companies at fair prices. He looks for businesses with a strong competitive edge, proven management, and solid financials—essentially, companies that are well-managed and possess a durable competitive advantage. Buffett’s approach emphasizes the importance of intrinsic value, which is determined through thorough analysis of a company's earnings potential and growth prospects.
The ‘fair price’ aspect is crucial. Buffett avoids overpaying by assessing whether the current stock price reflects the company's true value. He prefers investing in stocks when they are priced below their intrinsic value, providing a margin of safety. This strategy reduces risk and enhances the potential for substantial long-term returns. By focusing on high-quality companies and purchasing them at reasonable prices, Buffett has built a reputation for prudent, successful investing.
