In his more than 60 years of investing, Warren Buffett has amassed several lifetimes of investing experience and mastered the art of delivering the perfect sharp, quotable quip for any question tossed his way. Here is a quote from the treasure trove of the Berkshire Hathaway chief’s annual letters. ‘Buy into a company because you want to own it, not because you want the stock to go up.’
Anyone can buy stocks. Buffett shops for businesses, not ticker symbols. And remember that you’re buying, not borrowing, shares. (Another handy guideline to remember: “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”)
Evaluating a company from the perspective of a potential business partner (after all, that’s what investing in stocks really is) is about looking at how well the business is run, whether it has a competitive advantage in its field and if the management team has what it takes to drive long-term growth and manage through short-term setbacks.
So strong is the belief in the companies he buys that when Buffett and his investing co-pilot Charlie Munger have extra dollars to invest, before they look elsewhere they shop the portfolio of companies they already own. Renewing their commitment to familiar businesses keeps things simple in a world where there is an overwhelming number of investment choices.
Finding great companies to invest in is step one. The ability to not only hold on through thick and thin, but to continue to buy when trouble hits — that’s the difference between a good stock picker and a great investor.
AB1 Price at posting:
6.5¢ Sentiment: Buy Disclosure: Held
