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Tuesday, 13 November 2012

Warren Buffett's Timeless Advice: 'Don't Make This Mistake'

By: Alex Crippen

Warren Buffett has some timeless advice for investors that he can't repeat too many times.
At the end of his live, two-hour appearance with Becky Quick on CNBC's "Squawk Box" this morning, she 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...
"I've been buying all my life.  I bought my first stock when I was 11-years old and it was about three months after Pearl Harbor, and Corregidor was falling, and they had the Death March at Bataan and all the news was terrible. It was a great time to buy stocks. And I should have held that stock forever, and I've been buying stocks ever since."
Did Seller Remorse help to keep Warren Buffet in the long-term investing game?
  • Uncle8888 sold some Kep Corp at 48% gain. Good!
  • Uncle8888 sold some more Kep Corp at 146% gain. SUPER!!!
But .... Seller Remorse when Kep Corp continued to climb even higher to XXX% unrealized gain.
Why sell? Fear of losing back? Hope of buying back cheaper?
Why not sell? Greed? Never enough?
Why not buy some for selling to curse the itch of buying and selling?
Is short-term trading and long-term holding a viable solution to survive in the market emotion of Greed, Fear, and Hope as retail investors?
Who can escape from Greed, Fear and Hope when our hard-earned monies are at stake?

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