Secret to Warren Buffett Investing
Filed by: wbsp, under Warren Buffett stock picks | Leave a Comment
In my post about Warren Buffett Stock Picks in a Recession, I went into how Buffett’s investment advice is for people to buy index stocks if they are not willing to put the time and effort into properly managing their investment portfolio. The reason is simple. If you buy and sell continually hoping to time the market, the commission fees will eat away at your principal. And the day to day, week to week, month to month or even year to year fluctuations are too unpredictable. Warren Buffett investing style is the epitome of buy and hold. When asked about his holding period, Buffett would say “forever”.
Let’s take a look at the concept behind this. Warren Buffett stocks are from companies that he wouldn’t mind outright owning. Take a moment to think about this. As a shareholder, you are a partial owner. But Buffett goes a step beyond that. He wants to be a business owner. This is not to say he wants to muddle in the daily affairs. That’s not it at all. But he wants a piece of the action so he looks for companies that are already well run and leave it at that. After all, if you believe in the fundamentals, the people and the business has an advantage over its competitors, it’s a good buy. Contrast this to stock traders nowadays. That’s what they are – stock TRADERS. They are not business owners.
If we extend the business owner idea into the brick and mortar business, do you expect to sell it in a few days? Months? Or perhaps a more reasonable answer is you’re going to hold it longterm for many years.
Let’s go further. How many are willing to invest in a brick and mortar store that they don’t understand and haven’t looked at the business plan? I wouldn’t imagine many. And yet, so many people are seduced by the call of the stock market. Leave all this noise out. According to Warren Buffett investing success, he’s able to focus on the fundamentals of the company with an even temperament. This means buying when TRADERS are selling at a recession panic. Warren Buffett stocks are companies he’s scavenged for cheap that he knows are way under priced. That’s the secret to Warren Buffett investing.
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