If I had £10k to invest today, I’d follow Warren Buffett’s advice when selecting investments. Over the past six decades, Warren Buffett has established himself as one of the world’s greatest investors. During this time he’s owned thousands of stocks, and earned tens of billions of dollars in profits for himself and his investors.
The billionaire has also developed something of an investing framework. He always follows this framework when considering any new investments for his portfolio.
Warren Buffett’s framework
Buffett started developing his investment structure when he was at college. At the time, he followed the activities of Benjamin Graham, who was already an established investor.
Graham believed that investors should view the shares they own as individual businesses. Stocks were pieces of real companies, he stated, not gambling chips in a casino.
Warren Buffett has used this advice to guide his investing ever since. He only buys shares in corporations he knows well and understands. What’s more, he only buys shares in companies that he wants to own forever.
I think following this advice is very sensible. Buffett has refined his mentor’s initial style over the years. However, it remains similar to this day.
A long-term portfolio
If I had £10k to invest today, I’d follow Warren Buffett’s framework for investing. That means sticking with firms I understand, and only owning stocks I’d hold for the long term.
There aren’t many businesses that meet these criteria. However, I don’t think that’s a bad thing. I don’t feel I’d be able to keep up with hundreds of shares. Buffett focuses his attention on just a few firms. That’s the strategy I follow as well.
Some examples of the types of businesses that I believe fit into this framework include Britvic and AG Barr. Both of these firms are easy to understand and have strong brands. I’d be happy to hold both of these stocks for many decades as a result.
Warren Buffett has also shown a preference for corporations like these in his portfolio. He has owned shares in drinks giant Coca-Cola for decades. He has previously said that the company’s strong brand and large profit margins are the key reasons why the business has been such a mainstay of his portfolio. Britvic and AG Barr don’t have the same brand recognition as Coke, but as UK alternatives, I think they’re highly attractive.
The bottom line
So, that’s the strategy that Warren Buffett has used to build his fortune over the past six decades. By following a similar approach, I think I can create a large financial nest egg utilising the stock market. It’s an approach that I believe anyone can follow by concentrating on high-quality businesses and holding these stocks for the long term.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended AG Barr and Britvic. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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