Wednesday, October 24, 2012

Buy or Hold Stocks ... Advice from Warren Buffett

Warren Buffett is perhaps the most successful investor of our time. He also has a folksy way of offering great advice for individual investors.

Here's what he said about buying, selling and holding stocks on CNBC this morning in Buffett's Timeless Advice: Don't Make This Mistake:

"Warren Buffett has some timeless advice for investors that he can't repeat too many times.

Becky Quick on CNBC . . . gave him a chance to do a free association reaction to a single word: "buy."

Here's his response:

"I say, basically, 'hold.' The idea that the European news or slowdown in this or that or anything like that, that would not cause you to, if you owned a good farm and had it run by a good tenant, you wouldn't sell it because somebody says, 'Here's a news item,' you know, 'This is happening in Greece' or something of the sort.

"If you owned an apartment house and you got to raise the rents a little and it was well located and you had a good manager, you wouldn't dream of selling it.

"If you had a good business personally, a local McDonald's franchise, you wouldn't think of buying or selling it every day.

"Now, when you own stocks, you own pieces of businesses, and they're wonderful businesses. You can pick the best businesses in the world.

"And to buy or sell on current news is just crazy. You're in a wonderful business. You've got people running it for you. You know you're going to do well over five to ten years. And to think news events should cause you to dance in or out of something that's a wonderful game is a terrible mistake.

"So, get into a bunch of wonderful businesses and stay with them..."


Heeding Buffett's common sense advice makes a great deal of sense to me.

And it works out quite well over time, too.

So don't get excited. Play the long game.

For individuals like us, that's the best way to play.

Thanks. Bob.

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