Warren Buffett emphasizes that focusing on a stock’s price rather than its intrinsic value is a mistake for investors seeking long-term success. At the 2003 Berkshire Hathaway Annual Meeting, Buffett explained that he and his partner, Charlie Munger, prioritize the value of businesses over their stock prices.
“If you go to bed every night thinking about the price of [stocks], it’s almost impossible to do well in equities over time,” Buffett said. He highlighted that, unlike many investors, he isn’t concerned with daily stock quotes. For example, Buffett noted that since purchasing See’s Candy in 1972, they’ve never worried about its market value because they focus on the company’s results instead.
Buffett warns that fixating on stock prices can be dangerous, as it suggests the market knows more than the investor. He encourages focusing on value and seizing opportunities when prices drop, noting that it’s often a mistake to stop buying just because the price has risen slightly. He candidly shared that this mindset cost them $8 billion in the case of Walmart stock, where they hesitated to buy more as the price increased.
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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.