Warren Buffett’s core principle in investing can be applied to almost every purchase we make: Invest for the long-term. Read more on this CNBC article:
Warren Buffett knows a thing or two about choosing worthwhile investments.
When deciding whether or not to invest in a company, he and his partners follow a few simple guidelines. One of those is trying to determine the company’s longevity.
“We sort of know it when we see it,” Buffett said during the the Berkshire Hathaway 2017 Annual Shareholders Meeting. “It would tend to be a business that for one reason or another we can look out five or 10 or 20 years, and decide that the competitive advantage that it had at the present would last over that period.”
Simply put, Buffett decides a business is worth investing in because it will last. He purchased See’s Candies with longtime business partner Charlie Munger in 1972 and spent more than $1 billion on Coca-Cola stock in 1988 — both of which turned out to be good bets and both of which he still owns today.
“His approach is to be really sure of something before he buys it, and one of the ways he exercises that discipline is to sort of almost never sell. Not never sell, because he does sell stocks, but he sort of says to himself, ‘I know I’m almost never going to sell it, I’ve really got to like it before I get into it,” Buffett’s biographer Roger Lowenstein, author of “Buffett: The Making of an American Capitalist,” explained to Yahoo’s Alexis Christoforous.
“It’s not the not selling that makes these so good, it’s that discipline to buy things only when he really, really likes them,” Lowenstein says.
While not everyone will garner the same results as Buffett on the stock market, his core principle can be applied to almost every purchase we make: Invest for the long-term.
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