Warren Buffett’s set to retire – but his timeless wisdom still guides my investing decisions

With the recent announcement of billionaire investor Warren Buffett’s retirement from day-to-day operations at Berkshire Hathaway, the investing world will soon lose one of its most reliable guiding lights.

Over the course of his legendary career, Buffett built an empire by keeping things simple: buy great businesses at fair prices, hold them for the long term and let compounding do the rest.

As the dust settles, many investors are asking what lessons can still be applied from the ‘Oracle of Omaha’ in today’s uncertain market environment.

Considering Buffett’s wisdom

Buffett’s catalogue of quotes offers plenty of insight. “Be fearful when others are greedy, and greedy when others are fearful,” is one of his best-known lines, and it feels particularly relevant right now. In recent months, Buffett has quietly increased Berkshire Hathaway’s cash position to near-record levels, signalling his caution in the current market. For me, this is telling. It suggests that despite strong performance from some major indices, valuations may be stretched or driven by speculative optimism.

In my view, this is not the time to chase hype-driven growth stocks. Instead, I’m leaning into another Buffett principle — focus on businesses with durable competitive advantages that can weather market storms. Defensive shares with pricing power and strong balance sheets are often a safe harbour in volatile times.

A defensive option

One such company for investors to consider is Coca-Cola, a stock Berkshire’s held for decades. Buffett once said: “If you gave me $100bn and said take away the soft drink leadership of Coca-Cola in the world, I’d give it back to you and say it can’t be done.”

For British investors who prefer buying UK-listed stocks, they can access Coca-Cola HBC (LSE: CCH) — the Europe-based bottler and distributor of Coca-Cola products across more than 25 countries.

It currently offers a modest dividend yield of 2.5%, but the reliability’s noteworthy. The company has increased its dividend every year for over a decade, underlining a commitment to shareholder returns. Meanwhile, revenue and earnings have been rising steadily over the past three years, even amid inflationary pressures and supply chain challenges.

Good value with some risk

The current forward price-to-earnings (P/E) ratio of 13 suggests the stock isn’t overvalued, especially given its recent track record. Over the past five years, Coca-Cola HBC shares have climbed 89%, equating to annualised growth of 13.5%. That’s a pace that would impress even the most seasoned investors.

Of course, there are risks. As a bottler, it’s more exposed to input costs and regional demand shifts than the global brand owner. Geopolitical tensions in Eastern Europe, where the firm has significant operations, may also pose challenges. Still, its diversified footprint across both mature and emerging markets helps mitigate these concerns.

Ultimately, while Buffett may be stepping back, his strategy lives on. Right now, I believe the best way to gain from his legacy is by considering high-quality, defensive stocks like Coca-Cola HBC — businesses with staying power and steady returns, no matter what the market throws at them.

The post Warren Buffett’s set to retire – but his timeless wisdom still guides my investing decisions appeared first on The Motley Fool UK.

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Mark Hartley has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.