For Buffett, the Long Run Still Trumps the Quick Return – NYTimes.com

He is the master of his domain–and he doesn’t like the short term (or shorting) that he sees in trading today.

Mr. Buffett, 82, is famous for investing in companies that he sees as solid operations and essential to the economy, like railroads, utilities and financial companies, and holds his stakes for the long run. The argument that the markets are better off today because of the enormous amount of liquidity in the stock market, a function of quick flipping and electronic trading, is a fallacy, he said.

“You can’t buy 10 percent of the farmland in Nebraska in three years if you set out to do it,” he said. Yet, he pointed out, he was able to buy the equivalent of 10 percent of I.B.M. in six to eight months as a result of the market’s liquidity. “The idea that people look at their holdings in such a way that that kind of volume exists means that to a great extent, it’s a casino game,” he said. Of course, unlike many investors, he plans to hold his stake in I.B.M. for years.

via For Buffett, the Long Run Still Trumps the Quick Return – NYTimes.com.

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2 thoughts on “For Buffett, the Long Run Still Trumps the Quick Return – NYTimes.com

  1. ludimilasdp says:

    Warren Buffet is a smart man, like many others, he looks for the gains in the long run, his skills of analyzing stocks and understanding how the market goes has been superior to a lot of other high set traders throughout the decades. As posted in this article http://www.economist.com/blogs/buttonwood/2012/02/investing , long term investing is a good way to go even with the gains and loses, you tend to make more money if you hold it through the full period then when you dont.

  2. I really respect Warren Buffet’s way of doing business. He actually invests instead of simply buying and selling. I agree that the current setup of the financial markets is causing traders to focus on short term instead of long term. Many finance schools emphasize investing in the market instead of investing in companies. However, sometimes people use this as an excuse to attack the idea of a liquid market in stocks and bonds.
    Having liquidity in the market keeps governments in check because for the most part they are punished for making bad decisions. Take the European debt crisis as an example. When the Euro was instituted, the new market didn’t accurately reflect reality. Instead of each government having to back up the debt with good decisions, countries like Greece could issue debt that appeared on the same level as debt from countries like Germany. In reality Greece didn’t have an economy that could sustain that debt but because the Euro Zone was doing fine, traders couldn’t tell the difference.
    Once the market started reflecting how risky Greek debt was, it forced the institutions of the EU to take action. Even though it has been very hard, the Greek government has been able to take steps in the right direction. This is causing the markets to trust them a little more and allowed Greece to get additional funding. http://www.guardian.co.uk/business/2012/dec/11/eurozone-crisis-live-greek-debt-buyback-deadline
    The government was only courageous enough to take these steps because the market had taught them what would happen if they didn’t.

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