According to Compounding Quality (@QCompounding), Warren Buffett and Charlie Munger focus on businesses within their circle of competence and quickly pass on opportunities that are complex or unpredictable, as shared on June 14, 2025. This disciplined approach helps them maintain consistent returns and manage risk effectively. For traders in the cryptocurrency market, this strategy highlights the importance of focusing on assets and protocols with clear, understandable fundamentals while avoiding speculative or opaque projects that could increase portfolio risk. Source: Compounding Quality Twitter.

According to Compounding Quality, Warren Buffett determines the intrinsic value of a stock by focusing on Owner’s Earnings, which is calculated as reported net income plus depreciation and amortization, minus capital expenditures and additional working capital requirements (source: Compounding Quality on Twitter, May 12, 2025). Traders use this approach to assess whether a stock is undervalued or overvalued based on future cash flows, a strategy that can lead to better timing when entering or exiting positions. Understanding Owner’s Earnings is especially relevant for crypto market participants watching for institutional shifts towards value-based investment models.