Early in his career, Warren Buffett (Trades, Portfolio) achieved tremendous investment returns by purchasing cheap but not great companies, and then waited for the market to properly value the company.
Later in his career, Buffett moved toward buying high quality companies at reasonable valuation metrics because these companies could reinvest capital at high rates of return for decades.
Both approaches worked, but the second approach is actually easier since you can make a purchase and not have to do anything for years as the great business makes money for you.
Tom Russo (Trades, Portfolio) is a fan of buying great consumer brands that would fall into the second Buffett category.Â
