It's no secret that inflation has been one of investors' primary concerns on the ASX share market over the past year or two. After lying dormant for more than a decade, inflation rates around the world took off during 2022. This inflation, along with the rising interest rates that it has prompted, has caused many investors to recalibrate their investing strategies. But what does Warren Buffett think about investing in 2023?

Warren Buffett is one of the greatest investors of all time. His truly astonishing near-60-year career as the CEO and chair of Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) has resulted in the shareholders of Berkshire enjoying astronomical share price returns.

As our chief investment officer Scott Phillips covered earlier his week, Buffett has managed to engineer an average gain for Berkshire shareholders of 19.8% per annum over the past 58 years. In cumulative terms, that works out to be a gain of 3,787,464%.

So this is a man who knows how to navigate all forms of economic weather. And has become eye-watering rich in the process.

But what can Buffett teach us about how to invest in 2023?

Buffett's advice to investors in 2023

Well, he has just released his latest letter to the shareholders of Berkshire Hathaway – a great place to start. Every year, Buffett pens an expansive letter to his fellow shareholders. This is typically jam-packed with insightful commentary on the investing world. As well as wisdom on how to think and invest prudently.

In his latest letter, Buffett said this on worrying about economic forecasts:

Charlie [Munger] and I… firmly believe that near-term economic and market forecasts are worse than useless. Worse than useless. Our job is to manage Berkshire's operations and finances in a manner that will achieve an acceptable result over time and that will preserve the company's unmatched staying power when financial panics or severe worldwide recessions occur.

So focus on the big picture, Buffett is saying between the lines.

But how does one invest going forward into 2023? Well, here's some more Buffett wisdom on navigating an uncertain future:

In 58 years of Berkshire management, most of my capital-allocation decisions have been no better than so-so. In some cases, also, bad moves by me have been rescued by very large doses of luck…

Our satisfactory results have been the product of about a dozen truly good decisions – that would be about one every five years – and a sometimes-forgotten advantage that favors long-term investors such as Berkshire.

The lesson for investors: The weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders. And, yes, it helps to start early and live into your 90s as well.

Buffett points out that when he bought US$1.3 billion worth of Coca-Cola Company (NYSE: KO) shares in 1994, Berkshire received US$75 million worth of dividend payments. By 2022, the annual income stream from these Coke shares had increased to US$704 million.

As Buffett would put it, this 'flower' has been able to ratchet up its dividends significantly. That's despite the Asian financial crisis, the dot-com bust, the global financial crisis, the pandemic, and now high inflation and rising rates.

Thus, Buffett is saying that if you find real top-tier shares, you won't have to worry about inflation, or anything else.

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Most investors know of the legendary Warren Buffett. Although Buffett is now well into his 90s, the performance of his company Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) continues to go from strength to strength. As does Buffett's net worth. At current estimates, this is now sitting at US$107 billion and counting.

So it goes without saying that this is a person we should all be taking lessons from on how to invest.

I certainly am. And I'll be using Buffett's wisdom to try and buy ASX shares at deep discounts.

One of Buffett's fundamental principles of investing is that price and value aren't the same things. Just because the share market is telling us that Commonwealth Bank of Australia (ASX: CBA) shares are worth roughly $110 today, doesn't necessarily mean they have a value of $110.

Let's take another example that investors might be a little more envious over. Today (at the time of writing), one share of the US e-commerce giant Amazon.com Inc (NASDAQ: AMZN) is worth just over US$100. But back in February 2015, those same shares were worth just US$19. So are both prices 'fair value'?

I would argue that the pricing Amazon was commanding back then was extremely undervaluing the business. That's why investors have enjoyed more than a 400% return in just eight years. That's a compounded annual return of 23% per annum.

Back in 2008, Buffett said the following in his annual letter to the shareholders of Berkshire Hathaway. Keep in mind that this was written in the midst of the global financial crisis:

…the market value of the bonds and stocks that we continue to hold suffered a significant decline along with the general market.

This does not bother Charlie and me. Indeed, we enjoy such price declines if we have funds available to increase our positions. Long ago, Ben Graham taught me that "Price is what you pay; value is what you get." Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down.

Now, recessions and a stock market crash like we saw in 2008 don't come along very often. But that doesn't mean we can't still employ this timeless wisdom today.

How to buy ASX shares like Buffett

Although the ASX share market has had a very positive start to the year, I still think there are many ASX 200 shares out there that are being priced well below what they are truly worth.

Take the JB Hi-Fi Ltd (ASX: JBH) share price. It's currently trading on a price-to-earnings (P/E) ratio of just 10. That gives the company a fully franked dividend yield of over 6.7%.

Contrast that with CBA shares. CBA is presently boasting a P/E ratio of 20.45, with a dividend yield of just under 3.5%.

Compared to CBA and the broader market, JB Hi-Fi looks like "merchandise that has been marked down" to me. Buffett has shown this method of value investing can reward investors handsomely. That's why I'm still looking for ASX shares trading at deep discounts right now.

The post I'm listening to Warren Buffett and buying ASX shares at deep discounts appeared first on The Motley Fool Australia.

The stock market has had an incredible start to the 2023 calendar year. Rewind back to the start of January, and we'll see the S&P/ASX 200 Index (ASX: XJO) was at 7,038.7 points.

But today, the ASX 200 is sitting at 7,541 points at the time of writing, a good 7.1% above where it began the year at. Historically speaking, this is an incredibly positive start to the trading year.

What's funny is that the end of 2022 was dominated by investor pessimism. Predictions were abounding that 2023 would 'inevitably' see a recession.

Rising interest rates and high inflation would result in a hard landing for the US economy, and probably Australia's too. Thus, shares were going to have a dreadful year.

Well, anyone who sold their shares on this pessimism would probably be feeling pretty silly right about now.

So that brings us to the question: will there be a stock market crash in 2023?

Is the stock market heading for an ASX 200 crash in 2023?

Well, I'll keep this one simple: I have no idea.

There could be a recession in 2023, or there might not be.

The share market could crash if we have a recession, or it could go higher.

The economy could boom but shares go into a bear market.

All of these scenarios are possible.

But I don't have a crystal ball. Even economists get these kinds of predictions wrong all of the time. And I'm not an economist.

So I'm not going to make any kind of predictions here today. And I'm certainly not basing my investing actions on what might happen to the stock market or the economy this year.

Instead, I'll be trying to follow the advice of the legendary investor Warren Buffett.

Back in his 2012 letter to the shareholders of Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B), Buffett said this about trying to invest based on economic indicators:

Of course, the immediate future is uncertain; America has faced the unknown since 1776. It's just that sometimes people focus on the myriad of uncertainties that always exist while at other times they ignore them (usually because the recent past has been uneventful)…

American business will do fine over time. And stocks will do well just as certainly, since their fate is tied to business performance. Periodic setbacks will occur, yes, but investors and managers are in a game that is heavily stacked in their favor.

The Dow Jones Industrials advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions. And don't forget that shareholders received substantial dividends throughout the century as well.

Since the basic game is so favorable, Charlie [Munger] and I believe it's a terrible mistake to try to dance in and out of it based upon the turn of tarot cards, the predictions of "experts", or the ebb and flow of business activity. The risks of being out of the game are huge compared to the risks of being in it.

So instead of worrying about whether there'll be a stock market crash in 2023 or not, I'm going to keep on doing what I've always tried to do: invest in the best ASX shares and exchange-traded funds (ETFs) as much as possible, at the best prices possible.

At the end of the day, nothing else really matters.

Sure, we'll get the occasional stock market crash. But these crashes are just good opportunities to load up on our favourite shares and ETFs at even better prices.

Worrying about recessions, stock market crashes, and trying to time the market is a fool's game (and not the good kind of Fool). I think we're all better off playing Buffett's game instead.

The post Will the stock market crash in 2023? appeared first on The Motley Fool Australia.

It's not often anyone gets to outdo the legendary Warren Buffett at investing.

After all, Buffett has an unrivalled six-decade investing career, which he has used to build his company Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) from relative obscurity to the US$693 billion behemoth it is today. Giving himself a net worth of US$110 billion in the process, of course.

Yet, like all of us, Buffett is only human. As such, he does make mistakes from time to time. I'm sure one of his biggest mistakes was passing up on Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) stock. Alphabet is the US tech giant that owns Google.

It is one of the most successful companies of all time, giving investors a 3,270% return since its 2004 IPO (that's 17.2% per annum compounded).

Yet neither Buffett nor Berkshire owns this company. Nor has Buffett or Berkshire ever owned it.

Buffett never bought Alphabet stock. Should we?

Alphabet's Google is one of the most dominant companies on the planet. It has near-total dominance in the global search engine business, only ceding ground where it has been completely barred from participating in a market, as has happened with China.

But Google also dominates in other areas too. It owns the Android smartphone operating system, which is by far the most used system globally. Other Alphabet apps like Google Maps, Translate, and YouTube are also among the world's most popular.

Quite simply, Alphabet has one of the widest and deepest moats of any company anywhere. And yet Buffett, who coined the term 'moat' himself, has never owned it.

To be fair, some aspects of Alphabet's business would be hard for a nonagenarian to get their head around. And Buffett has come out before and waxed lyrical about his love of the company and regret in not buying it:

But even though Buffett has never bitten the bullet on Alphabet, that doesn't mean we can't. And right now might be the perfect time to consider an investment.

Be greedy when others are fearful

Alphabet stock has had a pretty shocking year. In early 2022, Alphabet's Class A stock hit a high of US$151.55. Today, it is going for just US$91.29, a fall of almost 40%:

This leaves the company on a pretty compelling valuation, in my view. One that hasn't happened for Alphabet in a decade.

At present, Alphabet's Class A stock has a price-to-earnings (P/E) ratio of 18.48. That means investors are being asked to pay $18.48 for every $1 of earnings.

By comparison, the ASX's Commonwealth Bank of Australia (ASX: CBA) has a P/E ratio of 19.7 right now. Woolworths Group Ltd (ASX: WOW) is sitting at a P/E ratio of 26.88.

Yes, by this metric, CBA and Woolies shares are more expensive than Alphabet stock. I know which company I would rather own for the next decade and beyond! So perhaps now is the time to do what Buffett did not, and buy Alphabet shares.

The post Alphabet stock: A once-in-a-decade opportunity to outdo Warren Buffett? appeared first on The Motley Fool Australia.

The good news is that so much is known about Buffett's investment style that it is easy for investors to replicate his strategies with ASX shares.

And while this doesn't mean you're guaranteed to generate the same level of returns as the Oracle of Omaha, it certainly puts you in a position to grow your wealth over the long term.

With that in mind, here are a couple of ways you can invest like Warren Buffett with ASX shares:

Long term focus

Buffett is well-known for taking a long-term perspective when making investments. Rather than make short-term trades, he buys shares "on the assumption that they could close the market the next day and not reopen it for five years".

This allows investors to benefit from compounding. This is something that Buffett benefits from today, with an estimated 90% of his wealth being generated after his 65th birthday.

Stressing the importance of compounding, Buffett's partner in crime at Berkshire Hathaway, Charlie Munger, once commented:

The first rule of compounding: Never interrupt it unnecessarily.

Buy wonderful ASX shares at a fair price

Rather than chasing after the latest hot stock, Buffett looks for wonderful companies that are trading at fair prices. Wonderful companies are those that have strong competitive advantages and are run by competent management. He famously quipped:

It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

In respect to competitive advantages or moats, Buffett spoke about how important it is for a company to have one in his 2007 letter to shareholders. He explained:

A truly great business must have an enduring "moat" that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business "castle" that is earning high returns. Therefore a formidable barrier such as a company's being the lowcost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with "Roman Candles", companies whose moats proved illusory and were soon crossed.

Overall, if you follow Buffett's strategy, I believe you have a good chance of generating solid returns over the long term with ASX shares.

The post I would follow Warren Buffett's advice when buying ASX shares in 2023 appeared first on The Motley Fool Australia.

Investors around the world keep a close eye on the goings-on of Warren Buffett and the multi-billionaire's company Berkshire Hathaway Inc (NYSE:BRK.A)(NYSE:BRK.B). However, a deal between the investing great and home-grown insurance share Insurance Australia Group Ltd (ASX: IAG) has been under Aussies' noses for years.

The market has been reminded about a whole of account quota share (WAQS) agreement between S&P/ASX 200 Index (ASX: XJO) insurer IAG and Berkshire Hathaway subsidiary National Indemnity Company (NICO) today with news of its renewal. Though, other key deals between the pair have been scrapped.

The IAG share price is up 0.84% on the back of the announcement, trading at $4.80.

Let's take a closer look at what agreements the pair have and haven't renewed.

IAG share price lifts on news of Buffett agreement

The IAG share price has climbed on Thursday after the company announced it renewed one of its previous agreements with Buffett's Berkshire Hathaway.

The renewed WAQS agreement represents 20% of IAG's WAQS program. It came into effect on 1 January 2023 and applies until 31 December 2029.

Quota share deals see an insurer – in this case IAG – offering a reinsurer – such as NICO – a portion of insurance premiums in exchange for paying out the same portion of claims – in this case, 20%.

IAG has now renewed 30% of the 32.5% WAQS with various reinsurers. Negotiations on the remaining portion are expected to be completed in the coming months.

Meanwhile, a strategic relationship agreement and equity ownership subscription agreement previously made with Berkshire Hathaway won't continue.

IAG formed a strategic relationship with Buffett's company in 2015. The billionaire said at the time:

I am 84 years old and this is my first investment in an Australian company. I've been very derelict, but it has been worth waiting for.

Back then, Berkshire Hathaway forked out $500 million for a 3.7% stake in IAG, paying $5.57 per share.

It also agreed its stake in the ASX 200 insurer would remain between 3.7% and 14.9%. Meaning the billionaire might now be free to sell his holding in the company.

IAG chief financial officer Michelle McPherson commented in today's release, saying:

The terms of the renewed agreement with Berkshire Hathaway's NICO reflect the maturing of our partnership, and the removal of supporting subscription and strategic relationship agreements provides consistency with our other quota share partner arrangements.

The post What do IAG shares have in common with Warren Buffett? appeared first on The Motley Fool Australia.

The legendary investor Warren Buffett may be in his 90s but he is still regarded as one of the best investors in the world. His holding company Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) has navigated the stormy waters of the past two years with aplomb, and its shares are now sitting at 40% above its pre-COVID highs.

So what would Buffett's first piece of advice for someone with no savings be? I would bet he'd repeat this advice he gave once: "Do not save what is left after spending, but spend what is left after saving".

You can't invest for your future if you have no savings to start with. And consistently building up a healthy savings account starts with spending less money than you earn. You simply can't get ahead unless you master this skill.

But once you have a healthy pile of savings squirrelled away for a rainy day, what does one do next?

How Warren Buffett tells most people to invest

Well, Buffett would tell you to start investing, since cash has proven to be a poor store of value over a long period of time.

Warren Buffett is well known for his value investing style. He loves finding companies that are trading for less than what he sees they are worth. One of his most famous quotes is "price is what you pay, value is what you get".

Buffett loves buying quality companies when they are on the nose with most other investors. Some of his biggest positions were built out when a company had a temporary fall in value.

But what if figuring out what an investment is worth is not your strong suit? Well, Buffett reckons most people would be better off just investing in a simple index fund anyway.

In 2017, he told CNBC that investors should "consistently buy an S&P 500 low-cost index fund" and "keep buying it through thick and thin, and especially through thin".

So that's some of Warren Buffet's wisdom that I think would be of most use to a would-be investor starting 2023 with no savings. Investing takes a long time to bear fruit. But when it does, you'll be glad you started.

The post Starting 2023 with no savings? I'd follow Warren Buffett and start building wealth appeared first on The Motley Fool Australia.

So what can we learn from Buffett's 2022 moves here on the ASX?

Well, let's check out how Buffett has been managing his cash over the year that (almost) was.

So according to a comprehensive analysis of Buffett's moves from our Fool colleagues over in the US, Buffett made several big moves in Berkshire's portfolio this year.

Buffett's Berkshire bets big on oil

Amongst his bigger bets was a massive increase in Berkshire's exposure to oil. Berkshire already owned significant chunks of oil giants Chevron and Occidental Petroleum. But Buffett more than quadrupled Berkshire's stake in Chevron in 2022, growing the company into Berkshire's fourth-largest position. He also boosted Occidental's position significantly as well.

So Buffett clearly thinks the oil space is one well worth investing in for 2023 and beyond. This might not bode well for motorists in the new year.

Another sector Buffett has apparently been focusing on in 2022 is tech. Buffett has famously been slow on the uptake when it comes to tech shares. He barely owned any tech stocks until 2016. But that was when Berkshire started buying Apple.

A combination of aggressive buying and a ballooning Apple stock price has resulted in Apple now being the largest holding in Berkshire Hathaway's portfolio. And by a mile too.

Berkshire's tech portfolio is expanding

Buffett hasn't bought too much more of Apple in 2022. but he has been loading up on two other tech stocks: HP and Taiwan Semiconductor Manufacturing Co (TSMC) HP is a dominant manufacturer of printers and PCs. he reportedly purchased a chunk of HP when it was sitting at a price-to-earnings (P/E) ratio of just 6, so this looks like a classic value play.

His purchase of TSMC is more interesting. TSMC is by far the most dominant manufacturer of advanced semiconductor chips in the world, with more than half the world's market share. It's Buffett's first foray into the world of semiconductors, but one he has built out aggressively.

His purchase of more than US$4 billion worth of TSMC stock has made this company into Berkshire's tenth-largest position today.

So what can we ASX 200 investors learn from Buffett's 2022 moves?

Well, it's pretty obvious that Buffett is still betting big on oil and tech – specifically semiconductors. Unfortunately, the ASX doesn't have much in the way of semiconductor stocks. But there are plenty of oil and energy shares, including Woodside Energy Group Ltd (ASX: WDS) and Santos Ltd (ASX: STO) to choose from.

The post What can ASX 200 investors learn from Warren Buffett's big moves in 2022? appeared first on The Motley Fool Australia.

We don't know when the next recession will be. Nor does anyone. Even economists have a mighty hard time predicting what the economy will do next year, or even next month. But what we do know is that there will be another recession at some point. Booms and busts are an inevitable part of our capitalist system.

We also know that periods of rising interest rates often come before a recession. That's what happened in the global financial crisis of 2007-2008. And in the early-2000s recession before that.

Australia technically escaped these recessions, but the world didn't. And the Australian economy was far from healthy during these periods, escaping the official definition of two quarters of negative GDP growth in 2008 by a whisker.

But we digress. Interest rates have indeed been rising in 2022, and by one of the fastest trajectories in modern times. Here in Australia, our official cash rate was just 0.1% at the start of the year. Today, following the Reserve Bank of Australia (RBA)'s recent December hike, it's now at 3.1%.

So if these hikes do lead to a recession in 2023, what are ASX investors to do? Sell out of everything, move to cash and wait for the good times to return? Perhaps we should start selling now, just in case?

That would be a big, wealth-destroying mistake in my view. I'll be following the advice of the legendary investor Warren Buffett instead.

Some Buffett wisdom for a recession

Perhaps Buffett's most famous quote is, "be greedy when others are fearful and be fearful when others are greedy". It's another way of saying 'buy low, sell high', which is the timeless advice everyone knows when it comes to the share market.

But this quote from Buffett's 2009 letter to shareholders of his company Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) was written in the aftermath of the global financial crisis. It directly addresses investing in recessions and is some of the best advice he has given on the topic:

Big opportunities come infrequently. When it's raining gold, reach for a bucket, not a thimble…

We've put a lot of money to work during the chaos of the last two years. It's been an ideal period for investors: A climate of fear is their best friend. Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance. 

In the end, what counts in investing is what you pay for a business – through the purchase of a small piece of it in the stock market – and what that business earns in the succeeding decade or two.

So here is Buffett calling a recession "an ideal period for investors". That's the attitude I'll be taking into the next recession we have.

Here's a clip of Buffett, courtesy of CNBC, discussing this principle further:

When a recession hits (or is about to hit), investors are often overcome by fear of losing money. As such, many have a tendency to throw the baby out with the bath water and sell out of everything. Thus, most share prices, not just those businesses likely to be hardest hit in a recession, can fall dramatically.

One of Buffett's biggest investments is in Coca-Cola Co (NYSE: KO) shares.

Do people stop drinking Coke in a recession? No.

And yet, in the global financial crisis, the Coca-Cola stock price fell by more than a third. It did so again during the COVID crash of 2020.

Yet today, Coca-Cola shares aren't too far from an all-time high. It would have been a bargain in hindsight to load up on this company at either of these periods.

So try and remember Buffett's wisdom if there is a recession next year. If you are greedy when others are fearful and put out the bucket while it's raining gold, it may well be the best thing that's ever happened to your share portfolio.

The post A recession could be coming in 2023. Here's Warren Buffett's investing advice appeared first on The Motley Fool Australia.

A number of the ASX's leading names have seen their share prices take a bath in recent times. For example, the Xero Limited (ASX: XRO) share price has dropped more than 50% in the year to date.

Whether the sell-off is justified for Xero and many other ASX growth shares is debatable. But the question now is whether these declines represent an opportunity, or whether higher interest rates mean these lower prices are about right.

Warren Buffett's wise advice

I don't think every business is worth buying just because its share price has dropped, but when almost the entire market is sold down, such as during the COVID crash, I think indiscriminate selling presents a great hunting ground.

One of the most quoted Warren Buffett sayings is this:

Be fearful when others are greedy and greedy when others are fearful.

In other words, the best time to buy ASX shares may be when there is widespread uncertainty because this is when share prices are lower.

But, there are also likely to be times when investors are euphoric. I think 2021 was an example of this when almost everything displaying growth was loved by investors. We should be cautious around those times.

Buffett also has this gem of advice from 2001:

To refer to a personal taste of mine, I'm going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the 'Hallelujah Chorus' in the Buffett household. When hamburgers go up in price, we weep. For most people, it's the same with everything in life they will be buying — except stocks. When stocks go down and you can get more for your money, people don't like them anymore.

In his 1997 annual letter, Buffett said:

If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?

Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall.

Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.

Foolish takeaway

Warren Buffett doesn't try to predict where share prices are going to go in the short term. If he sees a wonderful business at a fair price, then he's willing to invest. For example, Taiwan Semiconductor Manufacturing recently entered the Berkshire Hathaway portfolio after Warren Buffett's business invested US$4 billion. He's still investing during this period and I think we can find some good ASX shares at the current prices.

If we waited until things seemed completely 'safe', share prices would probably have gone much higher. Plus, there always seems to something going on in the news, so it may be wise to ignore that noise.

The post Is it safe to invest in ASX shares now? Take advice from Warren Buffett appeared first on The Motley Fool Australia.

Not that Warren Buffett knows too much about retirement. Although the man is now 92 years old, he is still very much not retired and remains chair and CEO of the company he has run for more than six decades, Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B).

Some Buffett wisdom for a pending retirement

And Buffett knows a thing or two about obtaining a growing passive income. He bought shares in Coca-Cola Co (NYSE: KO) back in 1988. Coca-Cola is a well-known dividend share over in the United States.

But, as our Fool colleagues over in the US point out, such was Buffett's prowess in finding the right price, he now enjoys a yield on cost of 54% every year.

So this tells us that Buffett only invests in shares that he feels comfortable holding for a generation or longer. Why Coca-Cola? Buffett's love of what he calls an economic moat is probably why. And Coke arguably has more than one. There'd be few people on the planet who wouldn't know what a Coke is for one. But, as usual, Buffett puts it best:

If you gave me $100 billion and said take away the soft drink leadership of Coca-Cola in the world, I'd give it back to you and say it can't be done.

But Buffett also tells us that it's ok not to go chasing individual shares for an investment portfolio, even a retirement one.

He once said this on index investing:

If you invest in a very low cost index find – where you don't put the money in at once, but average in over 10 years – you'll do better than 90% of the people who started investing at the same time.

So that's the two takeaways we can take from Buffett for a healthy retirement. Buy the best companies at the right price. And if you don't know how, stick with a low-cost index fund.

The post Almost ready to retire? I'd follow Warren Buffett's tips to enjoy a growing passive income from ASX dividend shares appeared first on The Motley Fool Australia.

What makes a stock a 'Warren Buffett-style' stock? That's a good question.

Warren Buffett is without a doubt one of the greatest investors of all time — and a living legend. Over the past 60 or so years, he has turned Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) from a failing textiles mill into the US$678 billion conglomerate it is today, achieving a compound annual return of around 20% per annum on average along the way.

What's in a MOAT?

So what kind of companies does Buffett typically invest in? Well, they usually have one thing in common: a moat. A moat is an investing concept coined by Buffett himself. Here's how he described the concept in his 2007 annual letter to shareholders of Berkshire Hathaway:

It's better to have a part interest in the Hope Diamond than to own all of a rhinestone. A truly great business must have an enduring 'moat' that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business 'castle' that is earning high returns.

Therefore a formidable barrier such as a company's being the low-cost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with 'roman candles', companies whose moats proved illusory and were soon crossed.

Looking at Berkshire Hathaway's current holdings, we see plenty of moats. Companies like Coca-Cola and American Express, long-term Berkshire holdings, possess some of the most powerful brands in the world. Amazon.com is one of Berkshire's more recent holdings. But there's no doubt Amazon has one of the globe's best pricing moats.

And Apple, Berkshire's largest holding, is one of the most dominant companies on the planet with its brand, management team, and scale.

Berkshire doesn't own any ASX shares at present, so it's hard to know what kind of Australian companies Buffett might go for today. But there is one ASX investment that hones in on Buffett's concept of a moat. And it's an exchange-traded fund (ETF) that I personally own.

The VanEck Vectors Wide Moat ETF (ASX: MOAT) is a fund that focuses on only holding US shares that display characteristics of Buffett's moat concept. These are selected by Morningstar, which looks for companies with "sustainable competitive advantages".

This ETF's current portfolio includes names like Microsoft, Alphabet, Kellogg, and Disney. Berkshire's holding Amazon is also present, as are Berkshire Hathaway shares themselves.

Why I will never sell this Buffett-style ASX ETF

So we know that this ETF attempts to invest like Buffett does by looking for companies with moats. But does it have the numbers to back it up?

Well, this ETF has returned an average of 14.72% per annum over the past five years. That beats its S&P 500 benchmark, which has returned an average of 13.19% per annum over the same period.

Since the fund's inception in mid-2015, the VanEck Wide Moat ETF has averaged an annual return of 14.88%, again beating the S&P 500 which averaged 12.78%.

Here's a look at this ETF's unit price to illustrate:

So we have a Buffett-style investment that has consistently outperformed the market. That's enough to earn this ETF a place in my own portfolio. And enough for me to never want to sell this ASX investment.

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Building a million-dollar portfolio might sound like a pipedream to many market watchers, but with the right strategy, know-how, and, arguably, luck, it can be done. Not only that, I'd argue it can be done by investing in only a handful of ASX shares.

Indeed, that's how investing great Warren Buffett built a fair chunk of his more than US$100 billion fortune. The strategy also helped his company Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE:BRK.B) post an average annual return of around 20% between 1965 and 2021.

Such a return would turn a $500 monthly investment into more than $1 million in just 20 years – before considering dividends. That's the power of compounding! Of course, past performance isn't an indication of future performance.

Here's how I would aim to build a $1 million portfolio by investing in only a few ASX shares.

Taking Buffett's lead

Fortunes can be made by choosing the right ASX share to buy at the right time.

For instance, investing $1,000 in Fortescue Metals Group Limited (ASX: FMG) shares back in the early 2000s could see a shareholder boasting a $1 million stake in the iron ore giant today.

Buying big into a small number of shares is the strategy generally employed by Buffett. Right now, nearly 75% of Berkshire Hathaway's US$296 billion portfolio is made up of just five shares.

The investing great famously once said:

We think diversification, as practiced generally, makes very little sense for anyone that knows what they're doing.

Of course, diversification plays an important role in many investors' portfolios.

Investing in a broad variety of ASX shares can protect an investor's assets in the event of a downturn in a single sector or company.

But, as Buffett points out, protecting against risk also lessens the chance of realising market-beating returns.

How to pick winning ASX shares

However, it's not easy to identify millionaire-making ASX shares. Even Buffett balances his statement by noting investing in a non-diverse portfolio demands a high level of knowledge and experience.

The billionaire touts his strategy of finding undervalued, quality shares. But more than that, he analyses an underlying business from top to toe, considering its balance sheet and competitive edges, before even thinking about buying in.

However, once he does snap up a stake in a company, he aims to hold tight for years to come. In the meantime, he largely ignores the market's movements.

While that's no easy task, it's how I would aim to build a million-dollar portfolio by investing in just a few potentially market-beating ASX shares.

Though, even a perfect portfolio is bound to experience rough days and downturns as the years go by. Additionally, any return on investment, or even downside protection, can never be guaranteed.

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As 2022 starts to close, it's only natural for investors to start peeking toward 2023. So far in 2022, the indexes have fared pretty miserably, with the Nasdaq-100 down 29% and the S&P 500 down 17%. Which one will have a better 2023?

Let's look at these indexes and their makeups and find out which is more likely to have a better 2023 ahead.

The indexes are highly concentrated on the top

At the top, the indexes have a lot of overlap.

Data source: Slickcharts. Data as of Nov. 19. *Note: Both Alphabet class shares combined.

Data source: Slickcharts. Data as of Nov. 19. *Note: Both Alphabet class shares combined.

As you can see, Apple, Microsoft, Amazon, and Alphabet make up a considerable chunk of these indexes. In the S&P 500, they account for 19.83%. It's basically double for the Nasdaq-100, with that group making up 39.16% of the index. It's pretty straightforward: How these companies do will significantly steer how the overall index does.

While these three are tech-focused, they compete in different markets. Both Apple and Amazon are a good measure of the pulse of the consumer, as their sales are highly affected by consumer sentiment. If inflation cools, and consumers don't need to worry about rising grocery prices or housing costs, they may treat themselves to the latest device.

Alphabet and Microsoft are business-focused, but for different reasons. Alphabet's primary revenue stream is advertising, and many clients have pulled back their spending levels in 2022 due to the uncertain business environment. If the outlook improves, expect this revenue to return. Microsoft's cloud business and Office product suite indicate how willing businesses are to spend on their infrastructure, but Microsoft's consumer product division also indicates how individuals are doing. 

If the consumer gets stronger and business outlook improves, these four will boom. If that's the case, then the Nasdaq-100 will likely have a better year because it is concentrated in companies that will benefit the most. But if 2023 brings an economic recession, the S&P 500's diversity will help it to outperform the Nasdaq-100.

The companies outside the top five are very different

For the S&P 500, when you move out of the top five, the companies become much more diverse.

Data source: Slickcharts. Data as of Nov. 19.

Now, there are industrials, healthcare, and energy sectors represented, giving the index some much-needed balance. Looking at the top 20 reveals even more diversity, with financials, energy, and healthcare rounding the index out.

This is far from the case for the Nasdaq-100.

Data source: Slickcharts. Data as of November 19. Note: Both Alphabet class shares combined.

Besides Pepsi and Costco, these companies are more in the tech sector. But, unlike the S&P 500, it doesn't get much better outside the top 10, with most of the top 20 consisting of chipmakers, communication companies, and software businesses. Now, this probably isn't a surprise because the media often refers to this index as the "tech-heavy Nasdaq."

Still, tech businesses don't do well if the economy is struggling.

Does that mean you should write the Nasdaq-100 off? Absolutely not. Tech stocks tend to do very well in the recovery phases of a recession. Plus, the stock market is forward-looking, and stocks usually tend to do better during a recession than leading up to one.

That last tidbit of information should keep investors in the market, especially now with a recession, or at least an economic slowdown, imminent. However, if you're trying to decide which index to buy, you need to utilize the 2023 outlook. If you think 2023 will be a repeat of 2022, then the S&P 500 is the better choice. On the other hand, if you believe the economy will begin to recover and the Federal Reserve eases its interest rate hikes, then the Nasdaq-100 is the place to be.

One last point: There's nothing wrong with owning both indexes if you don't know what 2023 will bring. Personally, I think this is an intelligent strategy, as it gives investors the upside of recovery and the safety of a balanced investment.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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There are few, if any, people whose names are associated with success in the stock market quite like Warren Buffett, and for good reason. With a net worth of more than $100 billion, Buffett has rightfully earned his spot among investing royalty. And one of the best things about his success is that it didn't take some extravagant strategy to do it.

As we endure a bear market that has shrunk the value of many investors' portfolios, here are some gems from Buffett that can help you better handle it and, indeed, use it as an opportunity.

There's value to be found

Warren Buffett is the poster child for value investing, which is a strategy by which investors look to find stocks trading at prices lower than their intrinsic (true) value. Value investors aim to buy undervalued stocks and profit from the increase in their intrinsic value eventually. For example, if a stock is trading at $100, but an investor believes the intrinsic value is $120, they'd invest, hoping to, at minimum, profit from the 20% increase once the market realizes its true value.

During bear markets, investors can find many great companies trading at a 'discount' or whose stock price may have overcorrected. Let's take Walmart, for example. From early April to mid-June 2022, Walmart's stock price dropped by well over 20% to around $120 per share, which many investors would agree was below its intrinsic value. Investors who took advantage of that dip have made more than 25% returns since then.

Generally, when a stock's price drops significantly, you must ask yourself why it's happening. But, during a bear market, when prices are dropping across the board, many of these declines are just a byproduct of the greater economy and not an indication of something fundamentally changing with the business.

Don't follow the crowd

There are many great investing quotes credited to Buffett, but none may be as relevant to today's environment as: "Be fearful when others are greedy, and greedy when others are fearful." Stock prices decline because investors begin selling more shares than people are buying, and demand drops. This is usually a sign that investors are fearful. Instead of following suit, it could be time to get greedy and turn it up a notch if you have the financial means.

History has shown us that bear markets are inevitable, and often necessary. The sooner you learn that the better because it helps you tune out the short-term noise and focus on the long term. It's easy to invest consistently when prices are rising, but not so much when prices are seemingly dropping before your eyes. Slowing or stopping investing can set back your financial progress.

Since going public in December 1980, Apple's stock price has increased well over 100,000% yet during that span, it's had negative returns in one-third of those years (including 2022 so far). Down years happen to even the best of companies; it's virtually inevitable. However, if you're focused on the long term, it shouldn't matter too much if your portfolio fluctuates weekly, monthly, or yearly as long as the results are there in the long run.

Utilize dollar-cost averaging

Buffett has long been a proponent of dollar-cost averaging, stating, "If you like spending six to eight hours per week working on investments, do it. If you don't, then dollar-cost average into index funds." To dollar-cost average, you pick your stocks, determine how much you can invest, and then invest on a set schedule no matter what. The frequency isn't as important as sticking to your preset schedule.

Dollar-cost averaging is good because it keeps you consistent as well as prevents you from trying to time the market -- which investors tend to do during bear markets more so than bull markets. Think about it: If prices are dropping, why buy today when you can get it cheaper later on, right? In theory, yes. But the problem is that's trying to time the market, which is essentially impossible to do consistently over the long run.

Dollar-cost averaging makes it easier to focus on the end goal without getting distracted.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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After taking over Berkshire in the mid-1960s, Buffett transformed the textiles company into a diverse powerhouse, owning many businesses outright and with significant investments in many other public companies.

Buffett's love of his investments is also well known. He even likes to remind shareholders of his commitment to the Coca-Cola Co (NYSE: KO) by typically sporting a can or a bottle at Berkshire's annual general meeting every year.

Berkshire Hathaway's massive portfolio

Berkshire owns stakes in more than 50 different publically-traded shares. But it might surprise investors to learn that almost 74% of Berkshire Hathaway's public investing portfolio is concentrated in just five companies. That's according to the company's latest 10Q filing, which is accurate as of 30 September.

Some famous names appear in Berkshire's list. There's Amazon.com Inc (NASDAQ: AMZN), Johnson & Johnson (NYSE: JNJ) and Visa Inc (NYSE: V). Buffett also owns chunks of Activision Blizzard Inc (NASDAQ: ATVI), Chinese electric vehicle manufacturer BYD Co Ltd and the relatively new-to-the-markets Snowflake Inc (NYSE: SNOW).

But none of these companies even come close to Buffett's top five holdings.

They are (from largest):

1. Apple Inc (NASDAQ: AAPL)
2. Bank of America Corp (NYSE: BAC)
3. Chevron Corporation (NYSE: CVX)
4. Coca-Cola Co
5. American Express Inc (NYSE: AXP)

So what can we learn from this?

What can we learn from Warren Buffett?

Well, a few things to point out. Some of these holdings, namely Coca-Cola and AmEx, are old Buffett favourites. Buffett first bought Coca-Cola shares back in the 1980s. His investment in American Express goes back even further to the 1960s.

But others are far newer. Apple is by far Berkshire's largest investment. The company has more than US$128 billion worth of Apple shares, which carves out a whopping 39.7% of Buffett's entire public portfolio. Yet Buffett only began buying Apple shares back in 2016. His Chevron stake is even newer, with Berkshire picking up its first shares in the midst of COVID-ravaged 2020.

So Buffett is clearly an investor that holds onto his favourite shares through thick and thin. American Express is a company that has had many, many ups and downs since Buffett first bought in back in the '60s. Yet Buffett has always stayed the course. Ditto with Coca-Cola.

But he is also an investor who knows how to jump on a trend. Buffett clearly saw the post-COVID collapse in global oil prices as an incredible opportunity.

It only took him two years to build Chevron into Berkshire's third-largest position – one worth US$31.2 billion today. And Apple has gone from absent to Berkshire's largest holding in just a few years as well.

So Warren Buffett is clearly an investor who likes to hold his favourite shares forever. But he is also one that isn't afraid to jump on a trend or a new idea and quickly build it into a sizeable position.

Perhaps above all, Buffett's Berkshire portfolio shows that he is just fine with having 40% of his portfolio in his favourite company: Apple. There are more than a few lessons we mere mortals can take away today.

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1) It's another solid day for the S&P/ASX 200 Index (ASX: XJO), up 27 points or 0.38% on Thursday afternoon.

In what feels (to me at least) like the year from hell for stock market investors, the ASX 200 is down just 1.9% over the past 12 months. By contrast, on Wall Street, the S&P 500 Index (SP: .INX) has fallen 14%, with the Nasdaq Composite (NASDAQ: .IXIC) down almost 29%.

The resources sector has been powering the ASX 200 index higher, with coal and lithium the standout commodities. The Whitehaven Coal Ltd (ASX: WHC) share price has soared more than 255% over the past year, while the Core Lithium Ltd (ASX: CXO) share price has jumped 160% in the same period.

You have to go all the way down to the 18th best ASX 200 index performer over the past 12 months to find a non-resources company, that being Computershare Limited (ASX: CPU), its shares rising by 41%. Bringing up the rear is poor old Magellan Financial Group Ltd (ASX: MFG), its shares crashing 71% over the past year.

Therein lies the tale of the tape for investors… great for commodities, awful for many industrials and most technology shares, including those who invest in US markets. 

Count me in the latter group, despite some individual success, like the takeover of MSL Solutions Ltd (ASX: MSL) at an 80% premium, and my largest position – Warren Buffett's Berkshire Hathaway (NYSE: BRK.B) – being up 10% over the course of the last year.

2) Still, I live to fight another day. I hold a decent cash balance, and hold out recovery hopes – over the next three to five years – for my beaten-down ASX growth stocks.

In these times when the macro – particularly inflation and, therefore, interest rates – is driving the direction of the markets, it's easy to get caught up worrying about the next day or week, rather than keeping your investing eyes on the horizon.

Howard Marks of Oaktree Capital is one of Wall Street's legendary investors. In his latest memo, Marks tells us mere mortals…

"The vast majority of investors can't know for sure what macro events lie just ahead or how the markets will react to the things that do happen."

He basically says – for any number of reasons – that investors should pay little attention to macro events. He also reminds us that volatility – effectively, the short-term movements in share prices – is just a temporary phenomenon, and that most investors shouldn't attach importance to it. 

As markets continue to gyrate mostly to the tune of the words of central bankers, particularly the Federal Reserve, Marks reminds us "what really matters is the performance of your holdings over the next five or ten years".

"Invest in companies that will become more valuable over time," says Marks. It's as simple as that.

3) The Hyperion Small Growth Companies Fund has had a rough 12 months, down 27% as fast-growing stocks have been taken to the woodshed.

In February 2021, Morningstar selected Hyperion Asset Management as the overall Fund Manager of the Year, and over the long term, the fund has soundly outperformed its S&P/ASX Small Ordinaries Accumulation Index benchmark. 

Writing in its October update, the Hyperion Small Growth Companies Fund says that, while they are seeing "persistent short-termism from market participants", they remain confident in the "strong fundamentals and sustainable competitive advantages" of the companies in their portfolio.

Hyperion's base case is that lower growth and lower inflation appear to be the most likely long-term scenario, an environment they believe their portfolio companies "will produce materially higher earnings growth than the broader market over the long term due to their superior value propositions, strong pricing power and low penetration rates".

You have to admire the fund's conviction, with its top five holdings making up more than 50% of its portfolio, being Wisetech Global Ltd (ASX: WTC), Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), Xero Limited (ASX: XRO), Domino's Pizza Enterprises Ltd (ASX: DMP), and Lovisa Holdings Ltd (ASX: LOV). 

None are cheap, even after the share prices of all apart from Wisetech and Lovisa have taken a pasting this past 12 months, yet the fund is clearly backing them all to deliver in the years ahead, damn the short-term volatility.

I'm hoping the Hyperion Small Growth Companies Fund is right, not least because I have a similar investing style and own some of the same companies (check disclosures below). 

For growth investors, these past 12-18 months have been tough to watch and tougher to invest through as we've watched the value of our portfolio wither away, sometimes quickly, other times by way of slow death.

Taking lessons from above, as we look forward, here are three things that give me comfort…

1. The huge winners of the next 12-24 months are rarely the same companies that have just seen their share prices shoot to the moon. In particular, I'm looking at the air coming out of many ASX lithium stocks, and I wouldn't be surprised to see much tougher times ahead for many ASX coal stocks. When everything resources goes up, it's worth remembering they are called commodities for a reason.
   
2. Although mindful that Howard Marks says we should pay little attention to the macro, I'm willing to stick my neck out and say I think most of the pain from interest rate rises is already behind us. There will still be bumps ahead, and potentially recession in the US, Europe and New Zealand (but probably not Australia), but I don't think we'll see huge falls in quality growth stocks going forward.

3. Over the long term, profit growth drives share price growth. Not valuation. Not interest rates. Not Putin, Trump, the RBA or the Federal Reserve. Hyperion is backing its top five holdings to keep growing for many years to come. Do that, and today's lofty valuations will be largely meaningless… over the long term.

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Warren Buffett is one of the greatest investors of our time and his company Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), regularly beats the S&P 500, a broader benchmark for the market, on annual performance. One of the ways Buffett and Berkshire are able to do so is through Berkshire's massive $345 billion equities portfolio, from which Buffett and the rest of his team purchase and sell select stocks.

Buffett has long been known as a value investor. He tries to find stocks that are trading below their intrinsic value and that the market missed or simply ignored. Over time, value investors believe these stocks will appreciate nicely as the market wakes up and takes notice.

Considering how successful Buffett has been with this strategy, let's look at five value stocks the Oracle of Omaha currently owns and see if they have helped his business succeed.

1. HP

Known as the original start-up out of Silicon Valley, HP (NYSE: HPE) has been making computers and printers for decades. While the company may not be seen as the innovator it once was, HP has become a stock that traditional investors have warmed up to for the basic reason that it prints plenty of cash profits and uses that to pay shareholders.

For fiscal 2022, HP is projecting free cash flow of between $3.2 billion and $3.7 billion. The company is also on track to return more than $5 billion to shareholders through dividends and share repurchases in the current fiscal year. With an annual dividend yield of close to 3.4%, HP stock trades at just over five times earnings.

2. Citigroup

After investing in nearly every other large US bank over the past few decades, Buffett and Berkshire purchased a nearly 3% stake in the embattled bank Citigroup (NYSE: C) earlier this year. Citigroup is an obvious value play, with its stock trading at just 60% of its tangible book value, or net worth. Shareholders are right to question the stock at the moment after the company has been dealing with regulatory issues regarding its risk management and internal controls, and after years of lagging returns.

But now, CEO Jane Fraser, who took over Citigroup in early 2021, commenced a big transformation plan which includes selling off most of the bank's international consumer banking operations. This will make the bank simpler and focus on higher-performing businesses. Citigroup still has a lot of work to do, but if management can clean up the regulatory issues and create a more focused operation, getting back to full tangible book value should be quite doable. While Buffett waits, Citigroup is paying an annual dividend yield in excess of 4%.

3. Kraft Heinz

The multinational food and beverage company Kraft Heinz (NASDAQ: KHC) is often referred to as Buffett's biggest mistake. Berkshire teamed up with 3G Capital in 2013 to purchase Heinz for $23 billion. They would eventually merge the company with Kraft in 2015, at which time shares opened around $71.

Today, shares sit at $38, so Berkshire has lost a good deal of money on the investment. Still, Berkshire continues to own more than 26% of the company. Kraft Heinz still has nearly $19.3 billion of long-term debt, but management made some serious progress in reducing that debt, grew free cash flow in recent years, and it also pays more than a 3% dividend yield.

4. Ally Financial

The large digital consumer bank Ally Financial (NYSE: ALLY), which specializes in auto lending, is another bank Buffett is purchasing stock in while its below tangible book value, and which pays an extremely healthy dividend yield of roughly 4.6%. Ally took off during 2020 and 2021, as the chip shortage and lack of auto inventory led to high car prices and huge demand, particularly among vehicles, enabling Ally to strongly grow its retail auto loan book.

But investors are now concerned about loan losses as consumer finances get drained and as many expect a recession next year. Ally is still originating auto loans -- and at very high yields -- and management seems to be taking a conservative approach to credit. If loan losses don't exceed management's built-in expectations, then I'd suspect Berkshire has a winner here.

5. Jefferies Financial

Berkshire recently unveiled its small purchase of shares in investment bank Jefferies Financial (NYSE: JEF) during the third quarter. Similar to Citigroup and Ally, Jefferies also has an attractive valuation, trading just over tangible book value. The bank also pays out more than a 3% dividend yield.

The broader investment banking sector struggled this year, as equity and debt underwriting significantly slowed down in the face of falling equity valuations and market volatility. But Jefferies is reportedly gaining market share and Berkshire and Jefferies own a mortgage business together, so Berkshire likely got to know management pretty well.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Warren Buffett has made many memorable statements throughout the years. One I've always especially liked is this line he wrote in his 1996 letter to Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) shareholders: "If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes."

That's exactly the kind of thing you'd expect to hear from a legendary investor known for his buy-and-hold long-term mindset. This is the same person who once stated that his "favorite holding period is forever". You'd also probably think Buffett has always practised what he's preached.

Think again. Buffett doesn't follow his own advice on this front nearly as often as you might expect. And it's actually made him richer.

The 10-year test

My curiosity recently got the better of me. I went back to Berkshire's 13F-HR filing for the third quarter of 2012. The purpose was simple: I wanted to see just how many of the stocks Buffett owned (via his stake in Berkshire) 10 years ago were still in his portfolio as of the latest regulatory filing.

In Q3 2012, Berkshire owned 37 stocks. Only 15 of those stocks were in the conglomerate's portfolio 10 years later. Of course, this didn't mean that Buffett hadn't owned the other 22 stocks for 10 years. After all, he could have bought them well before 2012 and still held them for at least that long. That was exactly the case with seven of them. 

There were also some other unusual scenarios to account for. One of those stocks from 2012 (Precision Castparts) was fully acquired by Berkshire along the way. On the other hand, Buffett sold Viacom during the period only to buy it back with the purchase of Paramount Global shares earlier this year. (Viacom later became ViacomCBS and renamed itself Paramount Global in February 2022.)

We also should cut Buffett some slack in a few cases. Three of the companies in which Berkshire owned shares back in 2012 were later acquired and taken private -- USG, Wabco, and The Washington Post. He couldn't still own these stocks today even if he wanted to.

Still, though, Buffett didn't hold on to 11 of the stocks in Berkshire's portfolio in Q3 2012 for at least 10 years. That's nearly 30% of the total number of stocks he owned back then. This got me to question whether his decisions to sell those stocks were smart moves.

A lazy analysis

I took an admittedly lazy approach in analyzing Buffett's wisdom in selling so many stocks before he had held them for 10 years. But I think my quick-and-dirty method is nonetheless instructive.

No, I didn't try to do the practically impossible task of guessing what Buffett did with the money made from those sales. I simply compared the performances of all the stocks in Berkshire's Q3 2012 portfolio that Buffett hadn't held for at least 10 years against how Berkshire itself performed between the end of Q3 2012 and the end of Q3 2022.

So what did I find? Only two of the 11 stocks that Buffett sold without holding for 10 years had delivered a total return greater than Berkshire's by the end of the third quarter of 2022 -- Deere and Verisk Analytics.

The bottom line here is that Buffett appears to have come out better overall by selling this group of stocks instead of holding them for 10 years. He's richer because he didn't dogmatically buy and hold.

RIP, buy and hold?

Don't say "rest in peace" to the buy-and-hold philosophy just yet, though. For one thing, Buffett did use some wiggle words in his previous statements. He didn't insist that investors should always hold stocks for at least 10 years. He merely said that you should be willing to own the stocks for that long.

The reality is that you can have a long-term mindset even when you don't hold some stocks for an especially long period. I don't think Buffett bought any of those stocks back then without being willing to own them for at least a decade. However, business dynamics can change. And it's possible for even the Oracle of Omaha to make mistakes.

Perhaps Buffett won't keep the stocks that he's recently added to Berkshire's portfolio for 10 years. If he doesn't, though, I think his advice to Berkshire shareholders in 1996 is still relevant. Be willing to buy and hold for the long term. Let your winners run. But if your premise for buying a stock changes, sell it. Buy and hold doesn't have to mean buy and hope.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Buffett is the CEO of his investing conglomerate Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B). This company has run laps around the returns of the broader markets for decades now.

So today, let's look at some pieces of Buffett wisdom that can help us create a 'best ASX shares to buy now' list. Our Foolish colleagues over in the US have a great list of Buffett quotes that we can draw from for inspiration.

So one of Buffett's most important quotes is "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price".

Buffett often talks about the 'moats' that his favourite companies possess. Just like the medieval fortification, an economic moat helps protect a company from usurpers. This moat can come in the form of pricing dominance, a strong brand, or the cost of switching to a rival product.

What does Warren Buffett look for in a 'best share?

We can see this playing out in some of Buffett's top holdings. Companies like the Coca-Cola Company, Apple and American Express have some of the strongest and most well-known brands in the world.

So our best ASX to buy now list should have companies that display this kind of resilience.

Think of the brand recognition of the Commonwealth Bank of Australia (ASX: CBA) across the country. Or the pricing power that Woolworths Group Ltd (ASX: WOW) has in selling food and household essentials. Or perhaps the cost of switching from Xero Limited (ASX: XRO)'s tax software to a rival.

All of these companies could well have the moats that it takes to be a 'wonderful company' in Buffett's eyes.

But just finding a quality company is only half the battle. Buffett is also famous for waiting for the exact right moment to pounce.

As he once said, "A too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favourable business developments".

Buffett loves to buy up shares when everyone else is selling, like say in a market crash. One of his most well-known sentiments is to be "greedy when others are fearful".

He also says that these moments to be greedy are opportunities, but that "opportunities come infrequently. When it rains gold, put out the bucket, not the thimble".

So remember this advice next time there is a market downturn. It may be the best chance you ever get to purchase your favourite quality ASX shares on the buy list.

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