“The stock market is a device for transferring money to patients from an impatient moment.” – Warren Buffett
Wall Street Journal The median investor highlighted a new study showing that they spend just six minutes before buying a stock.
It is no wonder that the average inventory holding period has declined from around 8-10 years in the 1950s and 1960s to the months today.
If you don’t know much about your ownership, it’s hard to hold it for a very long time unless you get rich overnight.
This short-term mentality is the antithesis of Warren Buffett, who resigned from his role as CEO of Berkshire Hathaway at the age of 94 last weekend.
Buffett’s longevity is impressive in many ways.
It’s another world that worsens stock prices at 19.9% per year for over 60 years. Total revenue of 5.5 or more A million The percentage is hard to guess.
Buffett first acquired stake in American Express in 1964. Berkshire Hathaway won its first stake in GEICO in 1976. He has been holding cola since 1988.
During my investment career, I learned that I would never be a stock picker like Buffett, but I quickly became obsessed with his views on long-term investments.
At the latest meeting, he said, “No one knows what the market will do next week, next month, tomorrow, because it’s easy to talk about it. But it’s not worth it.”
I know why people talk about the short term – it’s funny. But he is right that it is not worth it. Most of what you need to know about investing is evergreen.
Buffett has been preaching this for years.
I’ve been reading it carefully I haven’t scripted Buffett & Munger A book organizing 30 years of insights from Alex Morris, Buffett’s annual shareholders meeting.
Here is a good passage from the 1994 conference:
He bought his first stock in April 1942 at the age of 11. The outlook for World War II wasn’t that good at the time. The US was not doing well in the Pacific. I’m not sure if I calculated that into a purchase of 3 shares, but think about everything that’s happened since then. Atomic weapons, major wars, presidential resignation, massive inflation at certain times, all sorts of things. It makes no sense to us to give up on what you can do well, for speculation about what will happen in some macro ways.
If your time horizon is measured in decades, you will be forced to deal with unpleasant conditions from time to time. That’s life and long-term investment.
I liked this about the risks of the same shareholder meeting:
Define risk as the possibility of harm or injury. And in that respect, we think it’s closely caught up in order to hold assets on the horizon of your time.
It is impossible to provide advice to anyone if they don’t understand the risk profile and time perspective. Extending the time does not guarantee a specific outcome. Inadequate results can occur over a period of 10-20 years.
However, your chances of success will improve dramatically the longer you spend in the game.
The reason it’s difficult to win in a short period of time is because the market is more unpredictable.
In 1999, Buffett spoke about compound interest.
Compound interest behaves like a snowman on sticky snow. The trick is to have a very long hill. This means living to be very young or very old.
Of course, thinking and acting is easier than ever in the long run.
This talks from Buffett at the 2020 Annual Meeting on the psychology of buying and holding shares over time.
I don’t recommend buying stocks today, tomorrow, next week, or next month. It all depends on your situation. In my view, you should not buy shares unless you expect to hold them for a very long time. They are also prepared financially and psychologically to keep the farm and prepare financially and psychologically to avoid looking at estimates. You’re not going to choose the bottom and no one can choose it for you.
If you can’t handle it psychologically, you should not own the stock as you buy and sell it at the wrong time.
Buffett is like a walking computer, but his temperament allowed him to continue for years and complicate. At a 2002 conference, he spoke about the importance of rationality over the brain.
There is no reason why you need a high IQ. However, temperament is extremely important. It can be innate, it can be learned, it can be enhanced by experience or in a variety of ways. You have to be realistic. You need to define the circle of abilities accurately. You need to know what you don’t know and you won’t be fascinated by it. I think you need to be interested in money, or you don’t think you’re good at investing. But if you are greedy, it will be a disaster. Because it overcomes rationality.
Long-term investments are easy, but not easy.
Michael and I spoke to Morris about his new book on Buffett and his animal spirit:
Read more:
My Favorite Warren Buffett Shareholder Letter
