When you’ve identified a great company that promises significant growth and returns over the next 20-30 years, the temptation to wait for a price decline before adding it to your portfolio can be strong. However, is this the best strategy?
Warren Buffett addressed this very question at the 1996 Berkshire Hathaway Annual Meeting. “I think it’s better just to own them,” he advised. He likened the strategy of waiting for a market panic to buy a great company to a mortician waiting for a flu epidemic, implying that such an approach may not be very effective.
Buffett’s insight suggests that when you find a high-quality company, it’s generally better to invest in it rather than waiting for a potential price drop. However, this doesn’t mean you should buy at any price. Buffett himself cautions against purchasing stocks at “egregious prices.” Therefore, while it’s important not to delay your investment unnecessarily, it’s equally crucial to ensure that the price you’re paying is reasonable relative to the company’s value.
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© 2024 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.