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That is this: it's OK to buy high price-to-earnings multiple companies provided they will change the game at some point in the future. And in turn, the strong company in question has dominance of a particular industry takes greater hold.
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "" The idea that value is somehow connected to book As stated in the above table, "Buffett told a packed house of shareholders at Berkshire Hathaway's & nbsp;latest annual meeting when asked about the logic behind his firm"data-reactid =" 17 ">" The idea that value is somehow connected to book value or earnings price – as Charlie has said, all investing is value investing, "Buffett told a packed house of shareholders at Berkshire Hathaway's latest annual meeting when asked about the logic behind his firm's purchase of Amazon.
Buffett continued, "I mean you're putting some money out there, and you're making a calculation as to the chances of getting money."
The 'Oracle of Omaha', which is one of his investment managers – or Ted Weshcler or Todd Combs – has bought some of Amazon's stock in recent months. Buffett's praise through the years for Amazon founder Jeff Bezos.
A champion of value investing
Buffett has long been a champion of a style of investing called value investing. The approach was pioneered by Buffett's mentor, teacher and author of 'Intelligent Investor' Benjamin Graham.
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Graham's value-based disciplines on investing included: ( 1) finding stocks trading below (2) looking for stocks with low price-to-book and price-earnings ratios; and (3) favoring companies steady profits. -Cola (KO) and Delta Air Lines (DALBurlington Northern. "data-reactid =" 22 "> Graham's value-based disciplines on investing: (1) finding stocks trading below intrinsic value; (2) looking for stocks Buffett has used his mentor's guideposts to scoop up large stakes in Coca-Cola (KO) and Delta Air Lines (DAL) over the years and not overpay Burlington Northern.
Buffett has also had a strong focus on the value of investing in long-term investors. "We are trying to be fearful when others are greedy and to be greedy only when others are fearful," Buffett said.
2019 Berkshire Hathaway Shareholders Meeting
Buffett's Amazon wager
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Purpose Buffett's purchase of Amazon flies in the face of his long-held investing views Amazon's stock – always trading on multiple valuation given its status in the tech industry – currently fetches a lofty forward price-to-earnings multiple of 51 times, & nbsp;per Yahoo Finance data. That's about two and a half times the price-to-earnings multiple of the S & P 500. The stock trades at an exorbitant 20 times price to book ratio on a trailing 12-month basis. "Data-reactid =" 38 "> But Buffett 's purchase of Amazon shares in the face of his long – held investing. Yahoo Finance data.This is about two and half times the price-to-earnings multiple of the S & P 500. The stock trades at an exorbitant 20 times price to book ratio on a trailing 12-month basis.
And, above all else, Amazon is known to have steady growth as well as aggressively to support growth businesses in retail, Alexa and the cloud.
Buffett's Amazon wager appears to be rooted in the logic of multi-price trading on multiple valuation 25, 50, 100 years from nowadays as it pushes ahead with its dominance across many industries. The legendary investor probably has a firsthand look at how disruptive Amazon could be via his consumer oriented businesses.
"The considerations are identical when you buy Amazon versus some of the earnings or earnings or earnings," Buffett said at the shareholder meeting.
Added Buffett's right-hand man Charlie Munger, "Do not you catch it? I do not mind getting caught early, the guy [Jeff Bezos] is kind of a miracle worker. It's kind of peculiar. "
Berkshire, one of the most influential companies in the game, and one of the most popular tech companies in the world.
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Brian Sozzi is an editor-at-large and co-host of 'The First Trade' at Yahoo Finance. Follow Brian Sozzi on Twitter @BrianSozzi"data-reactid =" 44 ">Brian Sozzi is an editor-at-large and co-host of 'The First Trade' at Yahoo Finance. Follow Brian Sozzi on Twitter @BrianSozzi
Yahoo Finance Morning Brief
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Read Sozzi's latest:"data-reactid =" 58 ">Read Sozzi's latest:
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