Just be comfortable when your portfolio is down 50%? Buffett says yes
During the Q&A section of Berkshire Hathaways Annual Meeting CEO Warren Buffett shared thoughts on people with fear shouldn’t own stocks.
„I’m not recommending that people buy stocks today or tomorrow or next week or next month. I think it all depends on your circumstances but you shouldn’t buy stocks unless you expect (…) to hold them for a very extended period and you were prepared financially and psychologically to hold them the same way you would hold a farm and never look at a quote and (…) you don’t need to pay attention to them,“ he said during the first virtual only Berkshire Meeting ever.
You’ve got to be prepared when you buy a stock having them down 50 per cent or more and be comfortable with it — as long as you’re comfortable with the holding.
— Warren Buffett
He also pointed out that in history the stock price of Berkshire Hathaway went down 50 percent for three times. „There wasn’t anything wrong with Berkshire when those three times occurred”, he said.
„You better be in the right psychological position and frankly some people are not really careful. Some people are more subject to fear than others. It’s like the virus. It strikes some people with much greater ferocity than others. And fear is something I’ve really never felt financially.“ He said he also thinks his partner Charlie Munger never felt that fear either.
Some people are more subject to fear than others. It’s like the virus. It strikes some people with much greater ferocity than others.
— Warren Buffett
„Some people can handle it psychologically. If you can’t handle it psychologically then you really shouldn’t own stocks because you gonna buy and sell in the wrong time.“ He also explained that you should not count on somebody else telling you this. „You should do something you unterstand yourself. If you don’t understand it yourself you’re gonna be affected by the next person you talk to.“
Here you can watch the whole meeting on Yahoo Finance. CNBC also had an live ticker from the meeting in written form.