The Rewards of Patience in Investing
Every year, the eyes of the financial world descends upon Omaha, Nebraska in May for the annual shareholder’s meeting to hear what the world’s richest investor, Warren Buffett has to say.
Usually, the mood is pretty upbeat because Warren Buffett’s stock picks have made some longterm shareholders millionaires a few times over. Everyone is always interested in hearing his wisdom and what he might let slip in terms of new acquisitions. However, while everyone might praise Buffett for his shrewd moves, one has to also congratulate him on the moves he doesn’t make.
There are lots of cliches in the world of finance but there are some that are deadly accurate. One is that a fool and his money are soon parted. Perhaps this is why the simple concept of buying low and selling high in order to make money on the stock market is so hard for a lot of people. They just don’t do their homework and invest in bad deals.
Moreover, in order to be rich, you have to learn to save your money. Buffett and his company Berkshire have sat on billions of dollars worth of cash for years looking on the correct investment to buy. This takes a tremendous amount of discipline. Just because you have money to invest, it doesn’t mean that you should.
During the financial crisis, Buffett’s phone was reportedly ringing off the hook from financial institutions looking for a bail out. However, he passed them by until he saw one he liked and that was Goldman’s Sachs for 5 billion dollars worth of preferred shares in the stock that pays Berkshire 500 million dollars each year in dividends – or 15 dollars per second.
Now, obviously, these numbers are staggering for the normal individual but it just goes to show the power of cash in a cash strapped economy. If people save for the right deal to come along instead of buying into the latest hyped company, then people would do much better in the stock market.
Related posts:
- Perils of investing in high dividend stocks
- Investing in an Indexed Annuity in Preparation for Retirement
- Growth Investing Strategy Using Small Cap Stocks
- Making a Smart Stock Investment
- Stock Trading: What is it?
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