Stock Market Investing - Value Investing(New way)

Value investing the new way is actually the more sustainable way of generating wealth over a long run. The concept was something that evolved with Warrens/Charlie's investing journey. They were the masters of the old way of value investing - to invest in cheap (or cigar butt type) companies that had one more leg of run to make money. Over the years of their collaboration, Charlie was able to convince Warren that there could be a better way to go about investing to grow wealth.

Cigar Butts not attractive anymore:

The shift that they made has become the template for newer way of value investing. Now they look for quality companies at a fair price and invest in them to compound their wealth. The part of selling and buying again is essentially taken out of the strategy. The investments in high quality companies would grow wealth overtime tax efficiently. Also, would give them better returns than the old way as they dont have to be right every time, instead they can be right once and then just ride on with the growth of the business.

Also, investing in quality business with great cashflow rather than cigar butts are bound to perform better overtime. The length of your investing horizon makes all the difference between the new way or the old way. You can make money using either of the strategies, but if you have to choose one for your investing strategy - the new way would be a sound approach.

New way gets a thumps up:

When someone asked Warren & Charlie during an investor meeting - if you were to start investing today would you follow the old way or the new way of value investing. Their response was unanimously to go by the new way. The taxes that you avoid paying in the new way adds up and can give a significant returns to you overtime.

I will leave you with the below quote -

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." ~ Warren Buffet

Disclaimer: The article is my opinion and is not meant as a investment advice. Please do you own investment research and follow approach that suits you best. Good luck!