Value investing has been a cornerstone of Warren Buffett's investing strategy for many decades, but during the recent Berkshire Hathaway annual shareholders meeting, the Oracle of Omaha and his longtime business partner, Charlie Munger, found themselves divided on the future of the approach.
Buffett argued that the future of value investing remains strong because of the competition. He suggested that there has been an increase in the number of people doing "dumb things" in the 58 years that Berkshire Hathaway has been operating, and that this has created opportunities for savvy value investors. Munger, on the other hand, was less optimistic about the future of value investing, arguing that there are too many investors competing for too few opportunities.
While the debate about the future of value investing continues, there are still lessons to be learned from Buffett and Munger's long and successful careers as investors. One of the most important lessons comes from Ben Graham's book, "The Intelligent Investor," which Buffett has long praised as a foundational text for value investing.
The core lesson of Graham's book is that investors should try to buy good companies at discount prices and hold them for the long term. This principle has guided Buffett and Munger throughout their careers, and it remains just as relevant today as it was when Graham wrote the book in 1949.
However, Munger cautions that while the lessons of Graham's book and other investing tomes may still be relevant, the investing landscape has changed dramatically over the last several decades. There is now so much money in the hands of so many smart people all trying to outsmart one another, making it harder for value investors to find good opportunities.
So, what should investors do in light of this debate? One possible approach is to continue to focus on buying good companies at discounted prices, but to be prepared to make less money than in the past. This may require more patience and discipline than ever before, as well as a willingness to ignore short-term market fluctuations and focus on long-term fundamentals.
Ultimately, the debate about the future of value investing will continue, but investors can still learn valuable lessons from Buffett and Munger's approach. By focusing on buying good companies at discount prices and holding them for the long term, investors can increase their chances of achieving long-term success in the ever-changing world of investing.
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