Warren Buffett would arguably have done better if he were willing to pay up for good companies. Would it be a practical strategy for people with monthly savings to invest immediately regardless of price? - Seedly
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Stefan Ong

Asked on 13 May 2020

Warren Buffett would arguably have done better if he were willing to pay up for good companies. Would it be a practical strategy for people with monthly savings to invest immediately regardless of price?

If the price of the company keeps going up, you earn higher returns.

If the price of the company remains the same, you get a growing for the same price.

If the price of the company goes down, you get a growing company for a cheaper price.

Cash is too much of a drag on overall returns.

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Frankie Rappaport
Frankie Rappaport
Top Contributor

Top Contributor (Jul)

Level 9. God of Wisdom
Answered on 13 May 2020

W.B.'s strategy could be flawed,

he trails the SP 500 over 5 years and over 10 years currently,

evidencing maybe one more time, that neither stock picking nor market timing are

possible over long term.

https://www.ft.com/content/00c722d6-760f-4871-a927-2c564fe17276

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Wilson Nid A Break
Wilson Nid A Break
Level 9. God of Wisdom
Answered on 13 May 2020

Warren Buffett would arguably have done better if he were willing to pay up for good companies - He had always been willing to pay a slight premium for a good company (one with a deep moat", which is the rationale for his famous quote " It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

But whether he can identify enough good companies within his "circle of competence" is a different story

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Frankie Rappaport
Frankie Rappaport

13 May 2020

Nobody could do this over very long term