One of the most successful investors in the modern era is the Oracle of Omaha, Warren Buffett.
Over the last few decades the legendary investor's Berkshire Hathaway business has consistently generated market-beating returns for shareholders.
For example, at the end of last year, Berkshire Hathaway had recorded an annual average return of 20.5% since it began trading in 1965.
This means that even if you had just invested a modest $1,000 into the company in 1965, you would be sitting on a vast fortune today.
Based on a return of 20.5% per annum, that $1,000 investment would have grown to be worth a mammoth $23.6 million at the end of 2019.
How is this possible?
Mr Buffett hasn't achieved this by taking moonshots on speculative companies like BrainChip Holdings Ltd (ASX: BRN) or Novonix Ltd (ASX: NVX). He has achieved it by using a relatively simple investment strategy – buy and hold investing.
The Berkshire Hathaway boss looks to buy shares in companies with strong business models, competitive advantages, talented management teams, and positive long-term outlooks.
He then holds onto them for a long period of time (unless the investment thesis breaks) and lets the power of compounding do the rest.
How can you replicate his success?
There's nothing to stop readers from following in Warren Buffett's footsteps and investing this way. All you need to do is look for those quality companies that you can invest in with a long term view.
The good news is that there are a good number of companies on the All Ordinaries Index (ASX: XAO) which I believe have the potential to generate strong returns for investors over the next decade and beyond.
For example, electronic design software company Altium Limited (ASX: ALU) looks well-positioned for growth. This is thanks to its exposure to the rapidly growing internet of things and artificial intelligence markets.
Another company that could grow strongly over the next decade and beyond is Cochlear Limited (ASX: COH). Ageing populations look set to drive increasing demand for its implantable hearing devices over the 2020s.
Finally, Pushpay Holdings Ltd (ASX: PPH) is a donation management and community engagement platform. It stands to benefit greatly from the shift to a cashless society and the digitisation of churches. As a result, I think it could be a long term market beater.
