Lessons From Warren Buffett

Lessons From Warren Buffett: Wall Street Needs Activity, You Don’t

Buy and hold might be a slogan that gets occasionally mentioned by brokerage firms, especially when they don’t want retail investors to flee in market downturns, but it’s not a philosophy that Wall Street really believes in for one simple reason, they get paid for activity. And having people treat investing like gambling is far more profitable than having investors patiently hold on to their stocks and bonds.

“. . . The money is in turning over stocks. I mean, people say how wonderfully you’ve done if you bought Berkshire in, you know, 1965 or something and held it. But your broker would’ve starved to death,” Warren Buffett said at the 2022 Berkshire Hathaway Annual Meeting. “But they don’t make money unless people do things, and if they get a piece of them. And they make a lot more money when people are gambling than when they’re investing. It’s much better to have somebody that’s going to trade 20 times a day and get all excited about it, just like pulling the handle on a slot machine.”

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© 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.

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