How can I invest like Warren Buffett in uncertain times?

We all love to emulate Warren Buffett – one of the most successful investors of the last 50 years. The 92-year-old has amassed a fortune of more than $100bn and earned the nickname, the ‘Oracle of Omaha’.

With the market looking uncertain, I look to Buffett to show the way forward. And, thankfully, they’ve got some lessons for us.

Let’s take a closer look.

Invest in quality

Buffett tells us to invest in quality stocks with a good business model. Mind you, they didn’t pay more for the stock. As a value investor, Buffett wants to make sure he gets a discount on what he sees as the intrinsic value of the stock.

Buffett once said in a letter to shareholders, “It is far better to buy a good company at a reasonable price than a fair company at a good price“.

Don’t settle for cash

In October 2008, Buffett wrote an article titled “Buy American, me”, where he discusses the dangers of not being comfortable holding cash. “Now, people with cash equivalents feel comfortable. They don’t have to. They have chosen a terrible long-term asset, which pays almost nothing and is sure to depreciate in value.“.

There may be some uncertainty, but sitting on cash is a guaranteed way to see the value of your portfolio decline significantly. That’s because inflation is still very high.

It can’t always have an upside

Buffett tells us that the future is always uncertain. He once said that uncertainty can be a positive thing because it means long-term investors can buy stocks knowing they won’t sell anytime soon. “Uncertainty is the friend of the long-term value buyer“.

However, I will caution this by noting that the US market looks expensive right now and there are expectations that the market will fall this year. But in England, the valuation is relatively low. Average price-to-earnings at FTSE 100 is 14, versus 21 in S&P 500.

I focus on value stocks in the index. Banks, especially those focused on the UK, like Lloydstrades with a price-to-earnings ratio of about half the index average despite its good performance.

Don’t over complicate it

Uncertainty is all around us when it comes to the markets. But Buffett tells us not to overcomplicate it by exploring new market areas for us. “Don’t invest in a business you don’t understand“, Buffett said.

So for a long time

Buffett invests for the long term, and so do investors who want to follow his lead.

“Successful investing takes time, discipline, and patience. No matter how great your talent or effort, some things just take time: You can’t produce a baby in a month by impregnating nine women.“.

It’s about finding undervalued stocks, having confidence in them, holding them for the long term and even buying more when the stock price drops.