Applying Warren Buffett's Investment Strategy to Travel

Dubrovnik, Croatia - The Castle Walls in this Medieval Port Town

Dubrovnik, Croatia - The Castle Walls in this Medieval Port Town

Have you found yourself frustrated by the long tourist lines and exorbitant prices of Western Europe? Though the Euro has been relenting a bit of late, there’s no denying that the dollar isn’t what it used to be and as I set about researching the perfect honeymoon trip for my wife and I, these facts of travel struck me, too. That’s the moment I learned to apply what I know about investing to the art of preparing a budget-friendly vacation.

One of the prevailing theories of value investing, a la Warren Buffett, is that there are often stocks and other investments trading at a discount to their true value. The market is efficient over the long run, but for periods, some stocks will be traded at above what they’re worth and others will be discounted below their true value. Sometimes, two companies that are fundamentally the same can trade at different prices based on recent events or name recognition. The Theory of Value Investing Applied to Travel is that there is no need to buy the hot stock at a high price. The world is a beautiful place full of bargain-priced treasures and those that appreciate good value should learn to seek them out.

For example, there is no denying that Italy is an expensive country to visit, particularly if you plan to engage in the normal tourist activities or avoid venturing out into the countryside where very little English is spoken and fewer UNESCO Heritage sites grab your attention. Ask yourself, what is it that makes Italy such a special place that it garners outrageous tourist prices? For me, the answer is that the Romans built an incredible society of culture and technology there centuries ago, much of which has withstood the test of time…and yes, the food and drink is pretty incredible, too. Now that I’ve identified what’s valuable to me in Italy, I can apply that understanding to seeking out its discounted relative.

The Romans didn’t leave their culture and technological know-how at home, and less than 100 miles (and at some crossing point, much closer) to the east of Italy across the Adriatic sits Croatia, with its many islands surrounded by crystal clear waters. There is a long history of Croatia’s connection to Italy, from Roman influences during the Byzantine Empire to comparisons drawn between the maritime trading strength of Venice and the walled city of Dubrovnik. Croatia is not at all lacking in UNESCO World Heritage sites either! Croatia shares the same Mediterranean climate as much of Italy, which means mild weather and excellent wine-producing conditions. In fact, unless you’ve got your eye on a specific attraction, name recognition is about all that Italy has on Croatia. Yet, if you look at the differences in prices on food and accommodations and most everything else, you’d think there was still fire in the streets from the Balkan Wars.

Perhaps the Balkan Wars discouraged tourism for a time, much like an oil spill deters investors from extremely lucrative oil-industry giants like BP, but rest assured, over time this imbalance will be restored. Croatia is now, a rapid rate, becoming a popular destination not just for in-the-know Europeans, but for people from all over the world. I can’t deny that there are other great bargains nearby (another post, I promise!) or that Croatia probably won’t be cheap forever. For now though, at 20-30% discounts to Italy, Croatia is still an undervalued stock I would not hesitate to buy.