Warren Buffett is known as the Oracle of Omaha for a reason. The 86-year-old Nebraskan has a sixth sense when it comes to investing his money.
The longtime chairman and CEO of Berkshire Hathaway, Buffett is worth more than $70 billion, according to Forbes.
As an investor, Buffett is the opposite of a day trader.
"Listen, if I knew how to double my money tomorrow, I would probably invest for the short term, too," says Buffett speaking recently at a Facebook Live event broadcast from Columbia University and moderated by Charlie Rose.
He has long had a buy-and-hold strategy.
"It's much easier to invest for the long term because you know what is going to happen. You know, in my view, with a very high probability you know what is going to happen 10 and 20 years from now in a major way, and I don't have the faintest idea what is going to happen tomorrow or next week."
When Buffett is looking to park his money, there are three things he looks for.
1. A unique product that will remain desirable for the long term
"I am looking for durable competitive advantage," says Buffett. "I am looking for something that has a moat around it for a considerable period of time."
2. Strong leadership
"I am looking for an honest and able management to run [the company] because I don't know how to run it myself," says Buffett.
3. A good price for a good company
"I am looking for a purchase price that is not excessive," says Buffett.
That doesn't mean he is picking through the penny stocks, though.
"It is better to pay a little too much for something that is a very good business than it is to buy some bargain but really a company without much of a future," he says.
It is better to pay a little too much for something that is a very good business than it is to buy some bargain but really a company without much of a future.Warren Buffettchairman and CEO of Berkshire Hathaway
And if Buffett doesn't come across a company that meets all three of his criteria, he doesn't invest. He's in no rush.
"I am looking for the exception. But the nice thing is, if there is thousands of companies out there, I really only have to be right on a couple," he says.
"It's exactly the opposite of baseball where you have called strikes and the pitcher is trying to throw it to you at the worst part of the strike zone for you. And if he succeeds in getting in that corner three times and you don't swing, you are out. In investing, it's a no-call strike.
"I can sit here all day and somebody can throw me one company after another and finally I get one in my sweet spot."
