Buffett's Breakfast Benchmark

Having a disciplined, yet somewhat flexible, spending strategy is one insight investors can glean from Warren Buffett’s daily breakfast routine, writes Validea CEO John Reese in a recent issue of The Globe and Mail.

Buffett’s plan, he learned from the HBO documentary “Becoming Warren Buffett”, includes choosing from a short list of breakfast options depending on market movements–  scale runs from $2.61 up to a grandiose $3.17, writes Reese. Hardly the lap of luxury, but in line with Buffett’s down-to-earth approach to investing: “Control your discretionary spending when stocks are down and use the opportunities the market gives you over time to buy quality stocks. Investors need to focus on investing in the long run, not short-term swings.”

Buffett, Reese explains, is a fan of buying into the market in regular increments to participate in both strong and weak cycles. “The idea is to buy more shares when prices are low,” says Reese, “and fewer when they are high, but to always be investing.” In a recent interview with Charlie Rose, Buffett revealed that Berkshire Hathaway bought “somewhere in the range of $12 billion” in equities over the past few months. While it’s unclear exactly what he’s been buying (the deadline for his quarterly SEC filing is February 14th) we do know he’s a long-term fan of bank stocks as well as food and beverage brands.

While Buffett is against trying to time the market, Reese notes, he is a firm believer in buying stocks of strong companies and holding them over a long period—years, not quarters or months. Reese offers an apropos Buffett quote: “Someone’s sitting in the shade today because someone planted a tree a long time ago.”