Is Warren Buffett's style of investing still relevant despite the rapid evolution of consumer behavior?

Often referred to as the Oracle of Omaha, Warren Buffett is one of the most successful investors of all time. He began his path to wealth at a young age, using the money he earned through paper routes to buy stocks. His early fascination with the stock market grew into a lifelong passion, helping his company, Berkshire Hathawaybe very successful.

Over the years, he has built it into a conglomerate with a diverse portfolio of businesses, including insurance, manufacturing, and retail. His investment success has made him one of the richest people in the world, but he is also respected for his generosity and easy living.

However, not everyone agrees with his investment style. Recently, the value investing strategy promises has come into question. In July, Forbes Jim Osman complained “the availability of simple financial data” that to him “caused the saturation of the market“.

He feels that this has left several stocks undiscovered or undervalued, limiting the effectiveness of the value model.

Value investing involves selecting undervalued companies with strong fundamentals and long-term potential. The philosophy, often expressed in Buffett's annual letters to Berkshire Hathaway shareholders, emphasizes the importance of patience, discipline, and a long-term perspective.

Although these simple rules still apply today, Osman feels that adaptation can be beneficial. In some cases, I think you're right.

Changing times

Let's consider the recently sold Berkshire Hathaway stock as an example. At the beginning of the year, the company dropped 63.3m Paramount Global (NASDAQ: PARA) shares in losses. The stock was down about 70% during that time.

Buffett took full responsibility for the loss but the question is: why, in today's world, did his traditional methods fail?

Paramount has faced significant challenges in recent years, leading to price declines. The main factors contributing to this decline are the proliferation of streaming giants such as Netflix again Disney+. As consumers shift to streaming services, the traditional cable television networks that Paramount relies on are losing viewership.

I believe that much of this behavioral change is driven by a change in the way people choose. Where previously we relied on expert advice, today, customer reviews control the narrative. In the past, we talked to a travel agent, read Roger Ebert's reviews or consulted a stockbroker. Now, we check Travel AdvisorRotten Tomatoes, and Trustpilot.

A case of recovery

While the Berkshire sale hurt Paramount, I think the stock can still recover. To do so, it must embrace the changing times and implement effective strategies to regain its market share. In particular, its strong product and extensive content library can give it a competitive advantage. If it can successfully market the Paramount+ on-demand service to another streaming market, it may be able to achieve this.

Looking at the balance sheet, its debt is $14bn and equity is $17bn. This is similar to Netflix, which is up nearly 50% this year. However, it has less cash and lower interest. Earnings are forecast to grow 77% annually and based on future cash flow estimates, the shares trade 75% below fair value.

I wouldn't say it's a stock I want to get into right now but it's in good financial shape and can recover with the right strategy. Who knows, Buffett might regret selling one day.