Kan Gu: Buffett's super returns rely on sustained value investing

Warren Buffett’s 60-year return exceeds 60,000 times, relying on consistent value investing. In fact, if investors can achieve about a 20% annual investment return, they can realize a 60,000-fold increase over 60 years. But the most important thing is to maintain continuous value investing—that’s the key to Buffett’s success.

Buffett’s investment performance makes many investors envious. But if you analyze his secret to success carefully, it’s not difficult to understand: keep doing the right value investing consistently. If you achieve an average annual return of about 20% and stick with it for 60 years, you can realize a 60,000-fold increase.

It sounds simple, but it’s very difficult to do. The hardest part is persistence. Finding and buying a high-quality stock to hold isn’t difficult; what’s hard is maintaining this approach for 60 years, blocking out various speculative temptations, abandoning hype around themes, and not listening to merger rumors. This requires immense confidence and perseverance.

Consistent value investing means long-term adherence to investment principles and strategies. In the capital markets, short-term fluctuations constantly challenge investors’ psychological defenses. Many investors frequently change strategies in market ups and downs, chase hot trends, and try to seize every fleeting opportunity. But Buffett remains steadfast in his value investing philosophy, unaffected by short-term market temptations.

Market short-term performance is often driven by emotions, making it unpredictable and difficult to grasp; meanwhile, the intrinsic value of a listed company is the foundation of investment. Over time, companies with true investment value will eventually shine. This unwavering commitment to value investing is the solid foundation for Buffett’s ultimate success.

Persistent value investing also involves deep exploration of a company’s value and long-term holding. Before investing, Buffett spends a lot of time and effort thoroughly researching target companies—analyzing their business models, competitive advantages, management capabilities, and industry prospects. He only invests when he believes the company can continuously create value and when the stock price is below its intrinsic value.

Once he selects an investment target, Buffett aims for long-term holding, growing together with the company. A company’s value growth is a gradual process that requires time to accumulate. By holding high-quality companies long-term, investors can fully share the dividends of growth and achieve steady wealth accumulation. This deep understanding and long-term trust in a company’s value enable Buffett to maintain patience and resolve, leading to substantial investment returns.

Continuous value investing is also a cultivation of investment mindset. The road of investing is full of obstacles and challenges—market uncertainty, business risks, and more—that can cause great psychological pressure. When facing market crashes and corporate difficulties, many investors fall into panic and anxiety, making irrational decisions. But Buffett remains calm and rational, responding to market changes with a peaceful mindset.

For ordinary investors, Buffett’s philosophy of continuous value investing offers important lessons. As long as the fundamentals of listed companies do not undergo fundamental changes, short-term fluctuations are only temporary. In the long run, value will eventually return. Only by maintaining a good investment mindset can one stay confident during market lows and remain clear-headed during market euphoria.