2. Buy Stocks on Sale This sounds so simple, right? For years, Buffett has been on the sidelines, waiting for a chance to buy stocks when they went on sale. But in March 2020, when the coronavirus pandemic hit, and the S&P 500 plunged over 20% within just 3 weeks, Buffett did not buy. Over the last 2 years, he was heavily criticized for not buying that dip. But now, nearly 3 years later, with stocks having sold off in 2022, Buffett has been buying again. Buffett believes in buying cheap, well-known companies with stellar earnings growth and solid free cash flows. Buffett Finally Makes His Move In 2022, Buffett stepped in with his biggest stock purchases in a decade, adding over $50 billion worth of Chevron and Occidental Petroleum to the Berkshire portfolio. The energy companies fit the bill perfectly as they have single digit P/E ratios, as earnings are on the rise, and record free cash flows. And he keeps diving in for more. He dollar-cost-averaged into the Occidental Petroleum position through Sep 2022. Then he paused. But as the shares fell again in 2023, he jumped in to buy more, adding more shares several times, including in October. Berkshire has now spent about $11.2 billion acquiring shares. It now owns about 26% of Occidental. Buying stocks on sale is the easiest way to invest like Buffett. Any investor can search for value stocks by the classic fundamentals like P/E, PEG or Price-to-Sales ratios. If you had done so to start 2022, you would have seen buying opportunities in Chevron and Occidental Petroleum, like Buffett did. It doesn't get any easier than that. 3. Learn to Pivot and Change Course Remember when Berkshire Hathaway owned IBM? Neither do I, but for 7 years, until 2018, Berkshire had a large position in the technology giant. Originally bought in 2011, Berkshire spent $10.7 billion, buying at the average price of $170 per share, to take a significant stake in the company. This was going to be Buffett's big play into technology, an area he had famously avoided for decades. But it never really worked out. In 2016, shares fell as low as $125. Buffett decided to sell, and exit the position, notwithstanding one of his most famous pieces of advice, "our favorite holding period is forever." Buffett shrugged off the defeat in interviews saying the company never lived up to expectations so he was changing course. What did he buy instead? Apple. In 2016, Apple was cheap with a forward P/E of around 10 and the Street was mostly ignoring it. That investment has more than made up for the mistake of buying IBM and is now one of the key pillars of Berkshire Hathaway's business. You will make investing mistakes, but the secret is to know when to pivot. Buffet does it, and you can do it too. Buffett's Final Key Ingredient: Discipline Buffett has one other skill as an investor that's hard to come by: discipline. He will wait, sometimes years, in order to buy a stock, or a company, at a low price. His discipline paid off in the 2008-2009 financial crisis when he was able to step in and offer financial assistance to struggling banks, offering a $5 billion bailout to Goldman Sachs, for instance, when others were on sinking ships. He had what his mentor Benjamin Graham, famously called, a "margin of safety." This can be achieved by being prepared for pullbacks, corrections, or even bear markets. Many investors, including Buffett, missed out on a buying opportunity in the 2020 coronavirus sell-off. But even if you missed that buying opportunity, another one is always coming. Just look at the energy sector. It was red hot in 2021 and 2022, but in 2023, it's one of the worst-performing sectors. The market volatility of 2023 has created value opportunities. Are you ready? How to Profit from Buffett's Strategy in Today's Market The Oracle of Omaha explained the essence of his wealth-building like this: "whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down." There's no shortage of quality stocks at "marked down" prices these days. Investors who get into great stocks at today's prices are positioning themselves for spectacular gains over the longer-term. Warren Buffett clearly believes this is the case. The question is, which are the best stocks to buy right now? Today, you're invited to access my just-updated Special Report, The Buffett Playbook: How to Master Your Investment Strategy. It reveals 3 principles Buffett used to build his enormous wealth, plus 5 promising stocks that fit his criteria right now. You can download The Buffett Playbook for just $1. You'll also get unrestricted access to all the real-time buys and sells from our long-term portfolios, including: • | Value Investor, focused solely on Buffett-style selections and strategy | • | Income Investor, highlighting rock-solid stocks paying healthy dividends | • | Stocks Under $10, which scoops up low-priced stocks poised to surge higher | This year alone, these private long-term investing services closed 24 double- and triple-digit wins, climbing as much as +200.3%.¹ Next year may be even more lucrative for long-term investors. You'll also get access to Zacks Premium with powerful research, tools and analysis, including the Zacks #1 Rank List, Equity Research Reports, Zacks Earnings ESP Filter, Premium Screener and more. Zacks Investor Collection enables you to find quality stocks at prices we believe Warren Buffett would love, plus other long-term picks to fit with any investing style. Don't miss out. This opportunity will end on Sunday, November 12. Download The Buffett Playbook today and start Zacks Investor Collection » Good Investing, Tracey Ryniec Stock Strategist Tracey Ryniec is editor in charge of Insider Trader and Value Investor portfolios. |
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