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How to Invest Like Warren Buffett

Delve into Warren Buffett’s investment strategy.

Photo of Warren Buffett

Warren Buffett is undoubtedly one of the most respected investors of all time. On paper, Buffett’s investment strategy is pretty simple:

  • Buy businesses, not stocks. In other words, think like a business owner, not someone who owns a piece of paper (or these days, a digital trade confirmation).
  • Look for companies with competitive advantages that can be maintained, or economic moats. Firms that can successfully fend off competitors have a better chance of increasing intrinsic value over time.
  • Focus on long-term intrinsic value, not short-term earnings. What matters is how much cash a company can generate for its owners in the future. Therefore, value companies using a discounted cash flow analysis.
  • Demand a margin of safety. Future cash flows are, by their nature, uncertain. To compensate for that uncertainty, always buy companies for less than their intrinsic values.
  • Be patient. Investing isn’t about instant gratification; it’s about long-term success.

Of course, what's simple in theory can be less so in execution.

If you want to emulate Buffett’s investment strategy, we’ve compiled some of Morningstar’s work on the approach he and partner Charlie Munger have pursued at Berkshire Hathaway BRK.A BRK.B. We’ve also taken a look at funds that emulate Berkshire’s style and some of the undervalued stocks in Berkshire Hathaway’s portfolio today. We wrap things up with words of wisdom from Buffett on investing.

3 Warren Buffett Stocks to Buy

These undervalued stocks are among Berkshire Hathaway’s holdings in 2023.

3 Warren Buffett Stocks to Avoid Today

These holdings in Berkshire Hathaway look overvalued to us.

Is Berkshire Hathaway Stock a Buy Today?

These four qualities set Warren Buffett’s firm apart.

10 Funds That Buy Like Buffett in 2023

These mutual funds hold the same stocks as Warren Buffett’s Berkshire Hathaway.

12 Lessons on Money and More From Warren Buffett and Charlie Munger

Wisdom from two of the world’s most successful investors.

What We’ve Learned From Warren Buffett and Charlie Munger

How these legendary investors have inspired the financial world and shaped the way we think at Morningstar.

How to Pick Stocks Like Warren Buffett

Berkshire Hathaway has traditionally benefited from being able to sniff out companies with moats, including for these holdings.

3 Things Investors Can Learn From Warren Buffett

Whether you’re new to the market or not, there’s plenty to learn from Berkshire Hathaway’s leader.

Even Warren Buffett Thinks Picking Stocks Is Hard

Great investing opportunities are rare, which is why indexing makes sense for most investors.

5 Takeaways From Berkshire Hathaway’s 2021 Shareholder Letter

Warren Buffett discusses why he keeps cash on hand, warns of “bloviated bull,” and explains why he’s not a stock-picker.

2020 Shareholder Letter Recap: Warren Buffett on Bonds, Buybacks, and Apple

What Berkshire Hathaway’s chairman left out of this year’s annual shareholder letter is almost as notable as what he put in.

2019 Shareholder Letter Recap: 4 Takeaways From Berkshire Hathaway’s Annual Shareholder Letter

Warren Buffett addresses Berkshire Hathaway after his exit, the problem with corporate boards, and why equities are still the place to be long-term.

2018 Shareholder Letter Recap: Buffett Says Focus on the Forest, Forget the Trees

In his annual letter to Berkshire Hathaway shareholders, Warren Buffett argues why the whole is much greater than the sum of its parts—and comments on that sizable cash stake.

2017 Shareholder Letter Recap: Stick With Big ‘Easy’ Decisions

In his annual letter to Berkshire Hathaway shareholders, Warren Buffett makes the case for doing less and sticking to the fundamentals of investing.

2016 Shareholder Letter Recap: Indexing the Best Choice for Investors Large and Small

Berkshire Hathaway CEO Warren Buffett praises indexing and American dynamism in his 2016 letter to shareholders.

2015 Shareholder Letter Recap: America’s Economic Magic Is Alive and Well

America’s golden goose of commerce and innovation will continue to lay more and larger eggs, writes the Berkshire Hathaway chairman and CEO Warren Buffett in his annual letter to shareholders.

2014 Shareholder Letter Recap: Berkshire’s Simple Secrets to Success

In the firm's annual letter to shareholders, Warren Buffett and Charlie Munger reflect on Berkshire Hathaway's history and future prospects.

2013 Shareholder Letter Recap: 3 Nuggets From Buffett’s Annual Letter

More clippings—and a few thoughts—for your Oracle of Omaha file.

2012 Shareholder Letter Recap: Don’t Hold Your Breath for a Berkshire Dividend

In his annual letter, Berkshire Hathaway chairman and CEO Warren Buffett laid out a case against a Berkshire dividend and a case for more big acquisitions, and issued a reminder not to worry about short-term uncertainty.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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