The One Thing Warren Buffett Considers Above All Else When Choosing an Investment
Written by
Laura Bogart
Edited by
Kristen Mae
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As one of the world’s wealthiest men, and someone whose name is synonymous with billion-dollar financial savvy, Warren Buffett seems like he inhabits his own unique orbit, far removed from the rest of us mere mortals. The CEO of Berkshire Hathaway is so well known for his business acumen and investing prowess that he’s earned the nickname “the Oracle of Omaha.”
And yet, at the end of the day, anyone can learn some down-to-earth lessons from the Oracle. To emulate his strategies most effectively, you need to understand his investment priorities and why he favors certain stocks. One of his top considerations is simple yet powerful: longevity. In a world where companies rise and fall at record speed, Buffett’s approach is surprisingly straightforward.
He Looks for Longevity
While other investors chase the latest and supposedly greatest trends in hot sectors like tech, Buffett plays the long game. He focuses on companies that make products less vulnerable to fads, preferring to invest in organizations whose goods will remain in demand well into the future.
In an interview, Buffett once shared that he looks for businesses that will maintain their advantage regardless of how the market shifts. “I am looking for durable competitive advantage,” he said. “I am looking for something that has a moat around it for a considerable period of time.”
If the term “moat” conjures images of protective ditches surrounding a castle, you’re not far off. In business, a “moat” refers to barriers that protect a company from competitors — only instead of water or giant spikes, it’s a unique product, a strong brand, or superior operational efficiency.
He Focuses on Businesses, Not Hot Stocks
Building that protective moat often comes down to steady leadership that fosters creativity and innovation. Buffett also emphasizes that he looks for organizations with “honest and able” leadership.
This isn’t to say he doesn’t factor in price when making his investment decisions. However, he evaluates price in terms of long-term value.
“It is better to pay a little too much for something that is a very good business than it is to buy some bargain but really a company without much of a future,” he said.
He Buys for the Long Term
Buffett isn’t swayed by the ups and downs of an ever-changing market, preferring to hold onto stocks for the long haul. He’s so known for making long-term investments that when he sells even a portion of a stock, it makes headlines.
His mantra is simple: You should hold a stock for 10 minutes only if you’re willing to hold it for 10 years. It’s a surprisingly straightforward approach to investing, but judging by Buffett’s massive success, it’s an undoubtedly effective one.
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