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Chapter 9. Holy Grails > The King of Buy-and-Hold: Warren Buffett

The King of Buy-and-Hold: Warren Buffett

Warren Buffett is the single biggest proponent of buy-and-hold. Like Sir Galahad, he has achieved his Holy Grail, and we salute his success. But is his strategy right for you? Can you achieve what he has by using it? Below are excerpts from Warren Buffett and Charles Munger’s (Berkshire’s number-two man) remarks at their annual shareholder meeting for Berkshire Hathaway:[7]

  • “We understand technology products and what they do for people. But we don’t understand the economics ten years out—the predictability of it. Is it comprehensible? We do think about it, but we don’t get anyplace. We would be skeptical of anyone who says they can. Even my friend Bill Gates would agree.”—Warren Buffett

  • “If you buy something because it’s undervalued, then you have to think about selling it when it approaches your calculation of its intrinsic value. That’s hard. But if you buy a few great companies, then you can sit on your $%@. That’s a good thing.”—Charles Munger

  • “We want to buy stocks to hold forever.”—Warren Buffett

  • “Think about a company with a market cap of $500 billion. To justify paying this price, you would have to earn $50 billion every year until perpetuity, assuming a 10 percent discount rate. And if the business doesn’t begin this payout for a year, the figure rises to $55 billion annually, and if you wait three years, $66.5 billion. Think about how many businesses today earn $50 billion, or $40 billion, or $30 billion. It would require a rather extraordinary change in profitability to justify that price.”—Warren Buffett

  • “We’ve seen companies with market caps of tens of billions of dollars that are worthless, and seen other companies that trade at 20–25% of their true value. It eventually gets sorted out. But the speculative mania in one area is not creating equivalent discounts elsewhere. We’re not finding businesses at half their real value today. Forty-five years ago, I had lots of ideas and no money. Today, I have a lot of money but no ideas.”—Warren Buffett



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