Too many investors focus on price to make their investing decisions. When a stock drops substantially from its all-time high, to them it has become cheap. However, Warren Buffett reminds us that long term investing success is based on buying companies based on what they are worth, not based on the prices they are selling for on any given day.
“The important thing is that you make your decisions based on what you think the business is worth,” Warren Buffett said at the 2012 Berkshire Hathaway Annual Meeting. “And if you make your buy and sell decisions based on what you think a business is worth, and you stick with businesses that you’ve got good reason to think you can value, you simply have to do well in stocks.”
Hear Buffett’s full explanation
See the complete Lessons From Warren Buffett series
© 2022 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.