Why Searching for Cheap Stocks Is the Wrong Investing Strategy

Keith Noonan, The Motley Fool
Why Searching for Cheap Stocks Is the Wrong Investing Strategy

Time and the luxury of patience are the individual investor's greatest advantages in the market, and strict adherence to distinctions between "value stocks" and "growth stocks" can lead to short-term thinking that hinders the pursuit of great deals. Berkshire Hathaway CEO Warren Buffett famously said that he'd rather own a wonderful company at a fair price than a fair company at a wonderful price. Buffett's incredible track record of stock-picking success is rooted in his understanding that long-term investing tends to create the best results, and this philosophy is at the heart of his oft-quoted bit of wisdom about great companies being superior to "cheap" companies.