Warren buffet was taught by Benjamin Graham, the author of the intelligent investor and the father of value investing. He was and still is Buffett’s idol.
Benjamin Graham taught the ‘value’ investing which is investing in a ‘valuable’ business at a low cost. But, this is not what Warren Buffett applied to become the successful investor he is today.
The secret is to his success is…………quality investing.
And he did not learn this from Benjamin, he learnt it from his partner Charlie Munger.
Warren Buffett’s Old Investing Method
It is stated in Charlie Munger Life and Career, A 10 Part Series that Warren Buffet did not follow Charlie Munger’s school of thought until the late 1980’s. Buffett would trade in and out of undervalued stock and sell them when they reached their full value by pushing management to unlock full value and he would not hold his positions more than a year or two. With quality investing the aim is to hold long term.
Quality Investing that He Applies Now
Munger would ask about the management strength, brand durability and what it would take for someone else to compete with it. This is quality investing that Warren Buffett later adopted which has made him the successful investor he is today. (More about quality investing will be covered later).