Today is election day in the United States, an event that’s watched around the world. While every American will be eager to see who their leader will be for the next four years, so too are investors, who are waiting to get an inkling into what the most powerful economy in the world may look like when all the votes are counted. But what’s an investor like Warren Buffett thinking?
Warren Buffett is one of the world’s greatest investors, and paying attention to what he does is key to getting an idea into what he is thinking and how he sees the investing landscape.
Buffett has made mention in the past that he is more of a Democrat. However, the Oracle of Omaha is hardly political. Furthermore, in 2020 he hasn’t endorsed either candidate for president, leading some to question which candidate is his preference.
So, who does Buffett think will be the best for investors?
Warren Buffett’s election preference
The thing with Warren Buffett is that he doesn’t care. These events are important, and he will definitely pay attention and get up to speed on any policy changes that may affect his businesses.
However, his approach to investing has always been a long-term mindset. And having a long-term mindset means having confidence that no matter what happens, in five or 10 years, America’s economy will be much stronger.
This is the approach every long-term investor should take and something that’s important to understand.
Even if whoever wins the election performs poorly, and the next four years are awful, Warren Buffett believes that over the long term, America will always be able to find a way to bounce and back and continue to grow.
Long-term investing
When you invest for the long term like Warren Buffett, this applies to all stocks, whether it’s a blue-chip value stock or a high-potential, small-cap growth stock.
So, you can consider a stock such as Enbridge — the perfect value stock for investors to take a position in today. The company is one of the best long-term businesses on the TSX. However, it’s facing some significant short-term impacts, which has hurt the stock price.
Despite these issues, Enbridge is still a massive cash cow. And on top of that, what makes its business so attractive, its major competitive advantages, will all still remain after the pandemic.
These are all qualities Warren Buffett would want in an investment.
It’s the same case for a stock like Xebec Adsorption. Xebec is in a completely different situation than Enbridge. The stock is relatively new and a lot smaller. In addition, it has seen only small impacts from the pandemic.
However, Xebec is attractive because it’s a great new technology company, especially in the clean energy space. It’s a stock with huge potential long term.
The company may not be for everyone, but if you do like it, you need to commit long term. You need to believe the stock will be worth significantly more in the future. That’s how Warren Buffett approaches an investment.
There can be short-term impacts that affect a company. But if it’s resilient and financially strong enough (which it should be to warrant an investment in the first place), then you shouldn’t have any problem staying committed to it for the long term.
And who knows? If it gets cheap enough and the long-term prospects haven’t changed, you can lower your average cost.
Bottom line
Events like the U.S. election are definitely important. It’s crucial investors watch what happens and understand what impacts it may have on financial markets and the economy.
However, it shouldn’t impact your long-term investment plan. Even if things don’t go well in the short run, it’s crucial to be committed to the long term, just as Warren Buffett is. If you can do that, you will be successful.
