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.

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JumpCrisscross 5 hours ago | parent | next [-]

> 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/w196...

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reilly3000 7 hours ago | parent | prev | next [-]

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

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patmcc 6 hours ago | parent | prev | next [-]

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.

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flkz 6 hours ago | parent | prev | next [-]

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

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koakuma-chan 6 hours ago | parent [-]

Is Intel undervalued? Should Intel be worth more? Intel is an example of a company that I had in mind.

	▲	Tycho 4 hours ago \| parent [-]
		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.

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ok123456 7 hours ago | parent | prev [-]

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