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In his 1986 letter to Berkshire shareholders Buffett pointed out the virtues of holding shares for many years, if not decades.
Such an attitude provides:
- A buttress against following the Wall Street fad of the moment pushing you to dump shares.
- Strength of mind when confronted with temporary operating problems, preventing irrational fear, and maintenance of gaze on the long term
- Immunization against becoming too enamoured of “a new corporate ‘concept’”, e.g. dotcoms or online social media.
- Time to be a true “investor”, i.e. time to analyse the underlying business. Fast traders cannot do this.
- A stable and trusting environment for operating managers to plan their businesses for value creation in the long run, knowing that an interested and supportive major shareholder will not cut and run. The psychological impact of this should not be underestimated; it engenders loyalty, focus on the long term, knowledgeable two-way interaction and honesty.
“We should note that we expect to keep permanently our three primary holdings, Capital Cities/ABC, Inc., GEICO Corporation, and The Washington Post. Even if these securities were to appear significantly overpriced, we would not anticipate selling them, just as we would not sell See’s or Buffalo Evening News if someone were to offer us a price far above what we believe those businesses are worth.
This attitude may seem old-fashioned…..To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
