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I just asked ChatGPT what Warren Buffett's strategy is, and it said buying undervalued companies and holding for a long time. Is that true? I thought it's not a

I just asked ChatGPT what Warren Buffett's strategy is, and it said buying undervalued companies and holding for a long time. Is that true? I thought it's not a good idea to buy loser companies.

reilly3000 10mo ago
Undervalued, not underperforming. Companies that others overlook but have solid fundamentals and great strategy.
ok123456 10mo ago
He calls them "cigar butts." His analogy is that you collect enough of them, and you have a whole cigar.
flkz 10mo ago
If it's undervalued it should be worth more, no?
- koakuma-chan 10mo ago
  Is Intel undervalued? Should Intel be worth more? Intel is an example of a company that I had in mind.
  - Tycho 10mo ago
    When people say undervalued in this context, they usually mean it has a low price to earnings ratio. Intel is definitely not that - although it could still be a good bet if you have reason to believe their fortunes will greatly improve in the future. But it wouldn’t be a Buffett target in its current state.
  - wtcactus 10mo ago
    Actually, yes, half a year ago Intel was massively undervalued when you looked at metrics like Price to Book ratio. It still is actually, although not as much.
patmcc 10mo ago
An undervalued company is one that everyone else thinks is a loser but actually isn't - if you can identify that (and maybe make some adjustments to it) you can make a lot of money pretty quickly.
JumpCrisscross 10mo ago
> I just asked ChatGPT Please don’t do this. > what Warren Buffett's strategy is, and it said buying undervalued companies and holding for a long time No. It’s cheap leverage applied to low-volatility assets bought for a fair price [1]. (Munger got him off the ‘cigarette butt’ strategy of buying on the cheap.) [1] https://www.nber.org/system/files/working_papers/w19681/w19681.pdf https://www.nber.org/system/files/working_papers/w19681/w196...
- Tycho 10mo ago
  According to the paper you posted (interesting analysis), it’s not just low-vol assets, but good quality ones. Also, they would no doubt do a lot more buying of undervalued (good quality) companies if they weren’t by this point “too big to care”, so to speak.

I just asked ChatGPT what Warren Buffett's strategy is, and it said buying undervalued companies and holding for a long time. Is that true? I thought it's not a good idea to buy loser companies.

reilly3000 10mo ago

Undervalued, not underperforming. Companies that others overlook but have solid fundamentals and great strategy.

ok123456 10mo ago

He calls them "cigar butts." His analogy is that you collect enough of them, and you have a whole cigar.

flkz 10mo ago

If it's undervalued it should be worth more, no?

koakuma-chan 10mo ago
Is Intel undervalued? Should Intel be worth more? Intel is an example of a company that I had in mind.
- Tycho 10mo ago
  When people say undervalued in this context, they usually mean it has a low price to earnings ratio. Intel is definitely not that - although it could still be a good bet if you have reason to believe their fortunes will greatly improve in the future. But it wouldn’t be a Buffett target in its current state.
- wtcactus 10mo ago
  Actually, yes, half a year ago Intel was massively undervalued when you looked at metrics like Price to Book ratio. It still is actually, although not as much.

patmcc 10mo ago

An undervalued company is one that everyone else thinks is a loser but actually isn't - if you can identify that (and maybe make some adjustments to it) you can make a lot of money pretty quickly.

JumpCrisscross 10mo ago

> I just asked ChatGPT Please don’t do this. > what Warren Buffett's strategy is, and it said buying undervalued companies and holding for a long time No. It’s cheap leverage applied to low-volatility assets bought for a fair price [1]. (Munger got him off the ‘cigarette butt’ strategy of buying on the cheap.) [1] https://www.nber.org/system/files/working_papers/w19681/w19681.pdf https://www.nber.org/system/files/working_papers/w19681/w196...

Tycho 10mo ago
According to the paper you posted (interesting analysis), it’s not just low-vol assets, but good quality ones. Also, they would no doubt do a lot more buying of undervalued (good quality) companies if they weren’t by this point “too big to care”, so to speak.