Does Buffett’s Value Investing Strategy Really Work Well, Especially During the 2020 Epidemic? Evidence from the American Stock Market

Warren Buffett’s value investing strategy is famous around the world which is regarded as the key reason for his success. But due to the huge losses incurred by Buffett and Berkshire Hathaway during the 2020 epidemic, some people start to doubt the validity of the value investing strategy. Therefore, the research questions in this paper focus on the quantification, validity, and robustness of Buffett’s value investing strategy in the American stock market. Consequently, three results are drawn from this research: following the idea of Buffett’s value investing strategy, the B-score constructed by 6 sub-indexes can be used to quantify the stock’s value; the B-score had a decent ability to predict stock’s future returns from 2015 to 2019, which infers the validity of value investing strategy when the economy is booming; the B-score lost the ability to predict stock’s future returns in 2020, but this result is not adequate to deny the robustness of Buffett’s value investing strategy when facing the extreme situations like the 2020 epidemic for many reasons, which are discussed at the end of this paper.