Warren Buffett famously said his “favourite holding period is forever.” I’m looking at two stocks that have been permanent features in the portfolio of his company Berkshire Hathaway through three major stock market crashes. He’s held them at least through the early 2000s dotcom bubble, the 2008 Global Financial Crisis, and the 2020 Covid-19 recession.

Let’s explore whether I’d buy these Warren Buffett stocks today.

Coca-Cola — Warren Buffett’s oldest stock position

Warren Buffett first bought Coca-Cola (NYSE: KO) stock in 1988. Accordingly, the soft drinks manufacturer was actually a stalwart of Buffett’s portfolio even before the relatively mild US recession in the early 1990s.

Berkshire acquired 400m Coca-Cola shares at around $3.25 per share. It’s never sold a single one. The Coca-Cola share price is now over $65, meaning the holding is valued in excess of $26bn today — a stunning unrealised gain of over 2,000%. On top of that, Warren Buffett (or at least, Berkshire Hathaway) earns an annual dividend yield above 50% on his initial investment.

Today, Coca-Cola’s in good financial shape. Net revenues grew 17% in 2021, operating income was up 15% and cash flow increased 28%. Moreover, the company continues to innovate with a new product range for 2022, including Coca-Cola with Coffee Mocha.

Based on consensus forecasts, the stock is arguably pricey at present, trading at 27x current year earnings. Nevertheless, I think there’s still value in this high-margin, cash-generative business that has increased its dividend regularly for the past 59 years.

American Express — Berkshire’s third-largest stock holding

Warren Buffett first invested in American Express (NYSE: AXP) back in 1963, when it was a young company mired in scandal, but began building the stake he owns today in 1993. Currently, the billionaire holds 151.6m shares, worth $29bn in total.

The American Express share price is up nearly 22% over 12 months. Last year, revenue grew 17% and total cardholder spending rose 25%. Additionally, AmEx recently raised its dividend by 20% to $0.52 per share.

Looking ahead, American Express stock should benefit from a continued recovery in the travel sector. Travel consultancy and associated card rewards have been historically important revenue streams.

As monetary policy tightens, the US economy may enter a recession in 2023. This could negatively impact the AmEx share price if consumer spending falls. However, the card payment company has always rebounded after recessionary shocks before and its long-term prospects still look good to me.

Would I buy?

A bear market could be imminent, but studying Warren Buffett’s long-term investing approach eases my worries. Buying and holding carefully selected stocks through thick and thin has handsomely rewarded the Oracle of Omaha over decades.

American Express and Coca-Cola currently trade near all-time highs. This could mean further upside is limited. Indeed, Berkshire built both positions years ago at considerably cheaper prices than today. However, they’re still in its top four stock market holdings, with no signs of selling.

In Buffett’s own words: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” AmEx and Coca-Cola are clearly wonderful companies in his view. That’s good enough for me.

Warren Buffett has a unique gift for identifying wonderful companies at wonderful prices. I’ll settle for those same companies at fair prices. I’d buy both shares today.

The post 2 Warren Buffett stocks he’s held through 3 recessions appeared first on The Twelfth Magpie.

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Charlie Carman owns shares in Berkshire Hathaway. American Express is an advertising partner of The Ascent, a Motley Fool company. 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.

I’m not yearning to retire either. However, I do like the idea of having that option available to me earlier than I might normally expect. Fortunately, a lot of Buffett’s wisdom is applicable, regardless of what specific targeted retirement age is in mind.

Develop good habits

“Most behavior is habitual, and they say that the chains of habit are too light to be felt until they are too heavy to be broken,” Buffett once said.

The possibility of retiring early will be lost if my day-to-day financial behaviour doesn’t fit in with this goal. So before getting stuck into investing, it’s vital to adopt the right habits that will serve rather than impede my progression.

For Buffett, these include not taking on credit unnecessarily and keeping some cash in reserve for unexpected costs. Interestingly, these are things he then takes forward into the market.

Leverage, Buffett believes, is not required for most investors to make money. He’s also well known for keeping a healthy amount of money on the sidelines and waiting for opportunities to emerge.

Ongoing education is also key for Buffett. This need not involve pursuing academic qualifications. Simply developing knowledge of personal finance and companies through regular reading could help bring a investor closer to financial independence. Buffett spends most of his working days doing just that.

Money for nothing

“If you don’t find a way to make money while you sleep, you will work until you die“.

While Buffett might be exaggerating here, I’d agree with the overall sentiment. Fortunately, the stock market can be a great way of passively growing wealth. By contrast, becoming a landlord means regularly dealing with ongoing maintenance issues and potentially troublesome tenants.

Naturally, there’s more than one way to grow rich via equities. Some Fools may be inclined to invest in high-growth stocks. As many investors in Tesla will attest, these have the potential to generate life-changing returns if bought early enough.

Of course, multi-bagging stocks like the electric car maker aren’t all that common. The ride to riches can also be a bumpy one.

Taking on excessive risk isn’t Buffett’s style. Conscious of the need to sleep well, he made his billions by investing in already-established giants such as Coca-Cola and American Express and simply holding on.

Learn to detach

A third tip from Warren Buffett’s playbook goes deeper than adopting sound habits and buying great stocks. It’s more to do with what actually goes on in our heads when the market is open.

“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”

In practice, this means running a portfolio as if it were a business. It’s not about proving other investors wrong and/or looking for excitement. It’s about keeping emotions in check, making sound decisions, based on my own risk tolerance and time horizon, and recognising that setbacks are inevitable.

And if I can buy stakes in businesses when others are fearful (as Buffett also suggests) then the option of retiring early might just come my way.

The post 3 Warren Buffett tips I’d follow to try to retire early appeared first on The Twelfth Magpie.

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American Express is an advertising partner of The Ascent, a Motley Fool company. Paul Summers 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.