Good Sayings Never Go Out of Style
Warren Buffett’s company, Berkshire Hathaway, hit $1 trillion market capitalization value on August 28, 2024. It is the 8th American company to reach this milestone, and the first non-tech focused company to do so. Today, Warren Buffett has about 28% of his company’s asset value in cash. That’s $325 billion in dry powder during what has been an aggressive bull market.
Buffett has long been known for his investing prowess and memorable quips on how to be a good investor. I thought I would take this opportunity to highlight some of my favorite quotes from this venerable gentleman, to help illustrate why our team’s “boring is good” philosophy aligns with not hopping on the bandwagon in a momentum-based market.
“Price is what you pay, value is what you get.” Our team fields questions all the time about buying a hot company now. Typically, it’s a name that has been in the news a lot, and whose price has shot up sharply in a short period of time. We are all for investing in a great company, but that doesn’t mean we are willing to pay an inflated price for it. Sometimes, patience is key.
“It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.” This makes sense when you pair it with his value statement. Buffett learned this from his former partner, Charlie Munger, and claims this philosophy increased his success rate and his investor returns. Well-run, “premium” companies are worth investing in, but be diligent about the price you pay.
“Someone’s sitting in the shade today because someone planted a tree long ago.” Patience is virtue, particularly in a long-term investor. I am a firm believer in delayed gratification, so this saying speaks loudly to me. Whether it is providing a legacy for your children and grandchildren, being charitably inclined, or enjoying retirement the way you want to, long term goals are best met by starting many years prior. Rome wasn’t built in a day, and neither is your net worth. The financial decisions (or indecision) you make today magnify your outcomes in the future.
“If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” “Our favorite holding period is forever.” If these quotes don’t amplify “boring is good,” then perhaps you’ll like Ralph’s version: be a buyer of a good stock, not a renter.
“Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.” Ralph’s corollary to this Buffet-ism is that economists were put on this earth to make weather forecasters look good. Almost every major research firm we utilize changed their economic forecasts several times this year. But you know what hasn’t changed much? People’s long-term goals, their investment horizons, and their risk tolerances. So don’t put too much stock (pun fully intended) in forecasts based on today’s environment. Take Socrates’ advice and “know yourself.” You are likely to improve your outcomes.
And one last comment courtesy of the Sage of Omaha; “The most important quality for an investor is temperament, not intellect.”
Grace LovelandNovember 25, 2024
Any opinions are those of Grace Loveland and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a complete description, nor is it a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance is not indicative of future results. Raymond James & Associates, Inc., member New York Stock Exchange/SIPC.
