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Billionaire Warren Buffett has been a successful investor that most of us can dream of.
However, his journey as an investor involves several simple steps. The first one is familiar to many of us as it is a common place to start. But it was a second stage, and I believe Warren Buffett changed his performance as an investor, as he stood by that first approach in favor of another approach.
Value-based investment
Buffett began as what is commonly known as a “value investor.” In other words, he tried to find stocks for sale for less than their current value.
This is a very common method for new investors, and many people use it.
For example, why do I own a penny share? Logistics Development Group? The main reason is the obvious values provided. The latest unaudited net asset value per share, released last month, was 26.1p. The current stock price is More than 40% less More than that.
We hope that the company’s investments, such as Finsbury Food Group, will increase in value over time. However, even based on current ratings, the share of the Logistics Development Group looks like a good value to me.
Buffett’s Bulb Moment
However, value investment can be compared to the butt of a cigar.
how? Warren Buffett said:I call this the “cigar bat” approach to investment. A cigar butt with only one puff left on the street may not provide much smoke, but a “buying a bargain” will make all that puff profitable. ”
Given that this approach was making him money, what caused Buffett to move from that stage of his investment career to another?
He believed in his partner, Charlie Munger, in his lessons. Because Munger was more willing to pay the brand’s sweet maker (reference candy) than Buffett originally had.
Munger thought that if the business had been well promised in the long run, it would have been a bit more paying that it would not be here or there with a grand plan of things. So that was proven with Sea’s.
As Buffett reflected, “It’s much better to buy a great company at a great price than a fair company”.
How to invest using this approach
Warren Buffett’s approach has influenced me.
For example, when I recently invested Ashtead (LSE: AHT), I thought the prices were fair to what I consider to be a great company, but it’s not a bargain to scream.
Currently, its price return is 17. For example, if revenues decrease, it could rise even further. For example, the weakness in the US economy is due to the low demand for Ashtead’s construction equipment.
But I consider it a great business. It has a proven business model and has gained considerable size over time. This makes it an attractive first choice for a large customer base and also allows you to serve clients at once at many different construction sites.
Ashtead takes a kind of long-term approach that Warren Buffett himself likes, implementing a set of strategic plans that will help him take performance to the next level. It remains a work in progress. I hope that what I’m hoping will help raise Ashted’s stock price over time.