Tags: Morris | Buffett | learning | patience

Motley Fool's Morris: Buffett Thrives on Learning, Patience

By    |   Wednesday, 25 March 2015 06:22 AM


Warren Buffett's Berkshire Hathaway has generated an annualized return of 9.8 percent over the last 15 years, compared to 4.1 percent for the S&P 500.

So what can we learn from the Oracle of Omaha? Motley Fool writer Patrick Morris offers several ideas.
  • "Never stop learning," he writes on his firm's web site. "Buffett figured out what he was good at and stuck with it through thick and thin, always honing his skill." Morris quotes from Buffett's partner Charlie Munger in the company's 2015 shareholders letter: "Buffett’s decision to limit his activities to a few kinds and to maximize his attention to them, and to keep doing so for 50 years, was a lollapalooza."
  • The importance of patience. Morris quotes Buffett from 2003. "We bought some Wells Fargo shares last year. Otherwise, among our six largest holdings, we last changed our position in Coca-Cola in 1994, American Express in 1998, Gillette in 1989, Washington Post in 1973, and Moody’s in 2000."
Getting back to Berkshire's 2015 shareholders letter, Buffett's commentary in it offers several important lessons for individual investors, says John Coumarianos, a former equity analyst at Morningstar.
  • "First, although it seems banal to say, a stock is an ownership unit of a business," Coumarianos writes on MarketWatch. "The lesson for investors is that a stock represents the value of a business’s future earnings. You should own it for that reason, and not because you think you can capitalize on its short-term gyrations."
  • "Volatility is not risk." If you are looking to invest money that you won't need during the next few years, the volatility you must accept by investing in the stock market is less risky to your finances than sticking with safer investments. The CBOE Volatility Index (VIX) has spiked several times since September without derailing the bull market.
  • "Keep a multi-decade time horizon. Buffett thinks long-term. Being able to have a longer time horizon allows you to . . . reap the inflation-beating rewards [stocks] deliver." Buffett is famous for holding on to stocks for decades and enjoying juicy returns as a result.
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Warren Buffett's Berkshire Hathaway has generated an annualized return of 9.8 percent over the last 15 years, compared to 4.1 percent for the S&P 500.
Morris, Buffett, learning, patience
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2015-22-25
Wednesday, 25 March 2015 06:22 AM
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