2022/2023 - What Warren Buffet Thinks

Warren Buffet and his long-term business partner, Charlie Munger, are arguably two of the most successful investors in recorded history.

Respectively aged 93 and 99 this year, they still have a ‘long-term’ investment mentality. And why not? This mindset has made them both billionaires, and by Buffet’s own admission in his 2023 annual letter to shareholders, patience has had more to do with their success than ‘smart’ investment decisions.

 Buffett often talks about how time is a competitive advantage.
“For many of us, investing is like planting an oak tree. You sow your seeds with the understanding that you won’t see sprouts for years because growing a tree takes time. As you can see, the stock market has been the rare example of something that becomes more certain with time”.

 That’s not to say that Buffet and Munger haven’t had capital losses or had to switch investment choices. Quoting from Buffet’s current shareholder letter, “Over the years, I have made many mistakes… businesses in which I have invested have died, their products unwanted by the public.” “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 favours long-term investors.” Patience.

 Additionally, investors should remember: “The S&P 500 has gone through 11 economic recessions over the past seven decades, and yet it’s returned an average of 8% a year since then.”

 While watching short term developments like the SVB & Credit Suisse issues with a cautious eye and how these things may impact client portfolios, at Evolution Financial we also subscribe to the view that strategic allocations, patience, transparency, sensible changes where necessary and long-term investment principles are of the utmost importance.

 So, while markets and hence portfolio performances were down last calendar year comparative to prior years and some more volatility likely in 2023, we believe the Australian economy’s figures and local share market overall are grindingly improving towards the end of year, and wish to ensure our clients are well placed for this and beyond - with the right mindset.