Why I’d follow Warren Buffett and buy cheap shares today

first_img Our 6 ‘Best Buys Now’ Shares Enter Your Email Address Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Many of today’s cheap shares could hold appeal for investors such as Warren Buffett. His focus on achieving a discount to a company’s intrinsic value when purchasing shares could provide scope for capital appreciation over the long run.With many other mainstream assets such as bonds and cash offering low returns at the present time, undervalued stocks may prove to be a profitable long-term investment.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Weak investor sentiment towards today’s cheap sharesDespite the stock market’s rebound since its March lows, many cheap shares are currently available to buy. Investors have a downbeat view of a number of sectors that face challenging operating conditions in the short run.But search out companies within those sectors that have solid financial positions and competitive advantages. These may be likely to survive difficult current circumstances to benefit from a likely economic recovery.Warren Buffett has previously purchased cheap stocks to generate high returns in the long run. Buying a company for less than it’s worth may also reduce an investor’s overall risks. They’ll obtain a wider margin of safety in case its future performance is less positive than expected.Recovering share pricesOf course, there’s no guarantee that today’s cheap shares will recover from their current low prices. The economic outlook could worsen. Meanwhile, some companies may be unable to adapt their business models to changing operating conditions.However, the track record of investors such as Warren Buffett shows that a long-term recovery is likely. He has benefitted from the world economy’s persistent return to impressive levels of GDP growth following a variety of crises.For example, over the past 20 years, the early 2000s recession and the global financial crisis caused some stocks to trade at extremely low levels for a period of time. Following them, the world economy returned to positive growth over the long run. This prompted improving operating conditions and stronger investor sentiment towards previous cheap shares.A lack of relative appealCheap shares may also be appealing today because of a lack of opportunities available elsewhere. Low interest rates mean cash and bonds have disappointing returns. Therefore, they’re unlikely to make up the majority of an investor’s portfolio.Meanwhile, high house prices may mean returns on property investment may be less impressive than those made on undervalued shares.Of course, there may be further challenges ahead for the stock market. Risks such as the ongoing coronavirus pandemic and Brexit may limit the scope for stock markets to rise in the short run.Therefore, diversifying across a range of cheap stocks could be a sound move. It may limit risk and allow an investor to follow in Warren Buffett’s footsteps to outperform the stock market. Certainly as it delivers likely further growth in the coming years. Image source: The Motley Fool I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. “This Stock Could Be Like Buying Amazon in 1997” I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Why I’d follow Warren Buffett and buy cheap shares today Simply click below to discover how you can take advantage of this. Peter Stephens | Wednesday, 16th December, 2020 See all posts by Peter Stephenslast_img read more