Investors often seek to buy great companies at bargain prices, but Warren Buffett warns against being overly focused on price. He believes that it’s more important to recognize the quality of a business than to worry about paying slightly more than what seems ideal.
At the 1997 Berkshire Hathaway Annual Meeting, Buffett shared that his philosophy had evolved over time: “If you’re sure about a business being wonderful, it’s more important to be certain about the business than to be certain that the price isn’t five or ten percent too high.” He admitted that his earlier obsession with price led to missed opportunities, as he used to be so cautious that even a minor price increase caused hesitation. In hindsight, Buffett acknowledged that this approach was a mistake, emphasizing the importance of prioritizing the value of the business over small differences in price.
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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.is no guarantee of future results.