“If the business does well, the stock eventually follows.” — Warren Buffett
Most investors watch a stock’s price to decide how they feel about investing in the business. The best long term investors watch the business to decide how they feel about the company’s stock price.
“Price is what you pay. Value is what you get.” — Warren Buffett
Capital flow moves markets and stock prices in the short-term. Earnings growth move markets and stock prices in the long-term.
In a nutshell, business fundamentals and the stock are 0% correlated in the short-term, but 100% correlated in the long-term.
“We find doing nothing the most difficult task of all.” — Warren Buffett
The investor who always needs something to buy will eventually buy something they shouldn’t. Activity for activity’s sake is a recipe for disaster.
”Time is the friend of the wonderful company, the enemy of the mediocre.” — Warren Buffett
The ability to do nothing and be patient are the rarest advantage.
“Never forget two things: First, widespread fear is your friend because it serves up bargain purchases, [and] personal fear is your enemy.” — Warren Buffett
Carefully curate your written and visual “inputs.” Most financial media such as CNBC, Bloomberg, WSJ, and Fox Business are narrated to spread fear, encourage clicks, and sell advertising.
”Successful investing takes time, discipline, and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.” — Warren Buffett
Long term investors should take advantage of fear, especially when it leads to widespread stock price declines. Never give in to it. Since, humans are born to be bad at investing.
It’s essential that you understand that your emotions, especially fear, are going to play all kinds of tricks on you along the way.
Final Advise:
”All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies.” — Warren Buffett
“You should buy stocks when you think you’re getting a lot for your money, not necessarily when you think business is going to be good next year.” — Warren Buffett