It would seem logical that an investor wants to buy low and sell high, and that ideally that sale should be at or near the highest share price that a stock reaches. However, Warren Buffett sees it differently, and he has no fear that others make money off a stock that he’s sold. In fact, he thinks it is an indicator that as an investor you are on the right track when it comes to looking for superior businesses.
“I would worry, frankly, if I sold a bunch of things right at the top, because that would indicate that, in effect, I was practicing the bigger fool-type approach to investing, and I don’t think that can be practiced successfully over time,” Warren Buffett said at the 1998 Berkshire Hathaway Annual Meeting. “I think the most successful investors, if they sell at all, will be selling things that end up going a lot higher, because it means that they’ve been buying into good businesses as they’ve gone along.”
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.