The billionaire Warren Buffett was successful as an investor that most of us could only dream about.

But his journey as an investor included several straightforward stages. The first is known to many of us because it is a common place to start. But this was the second stage, which on the side is the initial approach in favor of another, which Warren Buffett believes that he has transformed his results as an investor.

Investment based on values

Buffett began as widely known as the “values ​​investor.” In other words, he tried to find shares that were selling for less than their current value.

This is a very common method for fresh investors and many people employ it.

For example, why do I have Penny Share Logistics Development Group? The main reason is the apparent value offer. The latest unexplored net asset value per share, published last month, was 26.1 Pens. The current price of the action is over 40% less than that.

I hope that the company’s investments, such as in the Finsbury Food Group, may augment over time. But even based on the current valuation, Logistics Development Group shares look like good for me.

Buffetta bulb moment

But investing values ​​can be compared to the cigar’s ass.

How? Warren Buffett gives this: “I call this approach “assignment ass” to invest. The cigar’s ass found on the street, which remained only one inclusion. “

Given that this approach earned him money, which meant that Buffett moved from this stage of his investment career to another?

He recognized the lesson of his partner Charlie Munger, because Munger was ready to pay more for branded sweetness (see candies) than Buffett initially.

Munger decided that if the company were sufficiently promising in a long -term perspective, paying a little more for it would not be here nor in the large plan of things. So it proved from See.

As Buffett reflected, “It is much better to buy a great company at a fair price than a fair company at a wonderful price“.

How do I employ this approach to investing

Warren Buffetta’s approach influenced me.

For example, when I recently invested Ashtead (LSE: AHT), the price seemed sincere to me for what I think is a great company – but not quite screaming the opportunity.

Currently, its profit price indicator is 17. This may augment even higher if profits have dropped, for example because the needy US economy leads to less demand in the United States on the construction equipment rental.

But I consider it a great business. It has a proven business model and sometimes gained a significant size. This makes it an attractive first choice for a immense customer base, and also allows customer service on many different construction sites at the same time.

Ashtead adopted a long -term Warren Buffett approach, implementing a series of strategic plans that will assist to transfer its results to a higher level. It remains in progress, I hope that in time it can assist raise the price of Ashtaad.