During the first half of 2008, Berkshire Hathaway Chairman Warren Buffett was ranked by Forbes as the richest man in the world, with an estimated net worth of $62 billion. He's amassed that fortune entirely through investing.

Following the credit crisis and the stock market dive, he's probably worth a bit less by now, but what's a few billion when you've got that much money? Regardless of his exact current wealth, Buffett's almost universally accepted as the world's greatest stock market investor. When he talks, it pays to listen.

Though Buffett is commonly considered a value investor, he seems just as focused on growth. Either way, he's proven that he's an intelligent investor. As Buffett's sidekick Charlie Munger once said, "All intelligent investing is value investing."

Google as a value stock
Buffett focuses on companies with favorable long-term economics and strong competitive advantages -- companies such as current Berkshire holdings General Electric (NYSE: GE), Goldman Sachs (NYSE: GS), Coca-Cola , and Wal-Mart (NYSE: WMT).

One Wall Street analyst called Coca-Cola "very expensive" around the time Buffett started buying it. It wasn't a typical value stock. But as Buffett once said about Coca-Cola: "If you gave me $100 billion and said, take away the soft drink leadership of Coca-Cola in the world, I'd give it back to you and say it can't be done."

Now that's a competitive advantage.

See, value investing is not all about buying stocks with low price-to-earnings, price-to-book, or price-to-sales ratios. Far from it.

For example, Google would have been a great value stock at its August 2004 IPO, despite selling at the time for more than 100 times earnings.

A value stock trading for more than 100 times earnings? Yep. Google was growing fast, continuing to take market share, and building sustainable competitive advantages in its enterprising culture, superior advertising platform, and brand loyalty. Given its growth rate since, and its powerful business model, it was underpriced back then.

Investing shock: Buffett was wrong
Buffett didn't buy Google. Sadly, neither did I -- a decision that has cost me thousands.

I held off on buying Google shares because they seemed expensive. I knew it owned the vast majority of the search market share, and had both a great corporate culture and innovative leaders. But I couldn't get past that lofty P/E ratio.

Instead, I was concentrating on buying poor companies on the cheap. These trash stocks, as I call them, have a nasty habit of getting even cheaper -- sometimes even going bust.

At least I'm not alone in buying "trash stocks." In his 1989 letter to Berkshire Hathaway shareholders, Buffett himself admitted to similar crimes. In a section of the letter called "Mistakes of the First Twenty-Five Years (A Condensed Version)," Buffett says he never should have bought control of the textile company Berkshire Hathaway.

Why? Even though he knew the textile manufacturing business Berkshire operated was in a declining industry, he was enticed to buy because the price looked cheap. While the Berkshire of today wouldn't exist without that original purchase, Buffett reluctantly closed the textile business in 1985. Continued...