Investing in knowledge is key
KNOWN as the “Oracle of Omaha,” Warren Buffett is one of the richest and most respected businessmen in the world. And as much as he is a businessman, Buffet is also known as an investment guru.
Indeed, he is one of the most successful investors in the world and has a net worth of over US$117 billion as of March 2022, making him the world’s sixth-wealthiest person.
For Buffet, it does not end with his riches and investment acumen, he is also renowned for his investment advice.
Every year the annual general meeting for Warren Buffett’s Berkshire Hathaway Inc draws about 40 000 shareholders to its base in Omaha.
The meeting normally features Buffett, 91, and Berkshire vice chairman Charlie Munger, 98, answering several hours of shareholder questions.
It is at these AGMs that Buffet shares investment insights.
In addition, through his letters, essays, op-eds and TV appearances, Buffett dispenses folksy, funny, plain-spoken advice on investing, management, life, happiness, and everything in between.
Many a quote are attributed to him.
One such powerful quote, yet so simple reads “Risks comes from not knowing what you are doing.”
Buffet’s message here is that an investor should always do his or her homework before making decisions.
It’s a strong piece of advice that ties in nicely with the next quote.
“Never invest in a business you cannot understand.”
Again, Buffett makes it clear that people should only invest their money in companies and industries that they know about.
From a man with such a high net worth, it’s probably wise to take that advice to heart.
Investment professionals often offer quality investment insights about companies, industries and the overall economy.
Even for those that are knowledgeable enough to analyse companies and markets on their own, there is no harm in getting a second opinion from other market players such as stockbrokers, analysts and asset managers.
As we come to the end of the first quarter, investment analysts have been releasing their 2022 outlook reports.
The latest firm to do so is Akribos Research Services.
In its equity market pricing outlook, Akribos says there is no alternative to the ZSE, which they believe is under-priced.
The brokerage firm says its regression pricing model based on growth in aggregate market earnings and aggregate dividend Pay Out Ratio yielded a Predicted PER of 32,96x for the ZSE.
This predicted PE, they say, is 51,79 percent above the current PER of 21,71x for the stock market implying an underpricing of the market with an implied fair market cap of $2,82 trillion.
Based on its findings, Akribos says the ZSE All Share Index is under-priced with embedded downside risks.
“The justification for this price outlook is the high probability of further devaluation of the local currency and increased inflationary pressure that will continue attracting investors to the ZSE in search of value preservation,” reads part of the research report.
The “There Is No Alternative — TINA” theme will continue to dominate investor thinking in 2022, in our view, leading to increased allocations to equities, according to Akribos.
Given the positive outlook, Akribos advises that investors follow value preservation strategies.
“The obtaining exchange rate environment makes a strong case for capital preservation focused investment strategies.
“We, however, do see some pockets of opportunity in some sectors although each company would need its own individual assessment.”
Disclaimer
As always all this information comes with a disclaimer, it’s for information purposes only and investors should make their own decisions to buy or sell any security.
The research adds to the body of knowledge about capital markets and listed entities. It helps make informed decisions and reduces risk.
Remember Buffet’s quote, “Risks comes from not knowing what you are doing.”