christmas

“Christmas is not a time nor a season, but a state of mind. To cherish peace and goodwill, to be plenteous in mercy, is to have the real spirit of Christmas” Calvin Coolidge

Christmas is nearing us. It is the time of the year to relax and enjoy your achievement for the year. As you might be travelling during this period, should you be worried about your portfolio while you are gone?

The Wise Words From The Oracle

The Oracle of Omaha, Warren Buffett once said, “I buy on the assumption that the stock market would close the next day and not reopen for the next five years”. I believe that is how we should look at investment as well. Even though the market quotes stock prices by the seconds, there is no reason for us to fall into the trap of constantly worrying about what the stock price is going to be for the next 10 minutes after we buy a stock.

We should be viewing an investment as a part-ownership into a company which we are comfortable to be associated with for years to come. In this way, we will make investment decision based purely on a business point of view rather than being influenced by stock price trends.

If you have purchase every one of your investment with that mentality, there is no reason for you to be worried about your portfolio even if you go on years with checking the prices of the shares.

Warren Buffett famously made an investment into electric-car maker BYD Co Ltd (1211:HK) back in 2008 at a price of HK$8.00. However, the share price of BYD has been extremely volatile since his purchase, climbing up to more than HK$80.00 per share before crashing back to sub-teens level in 2011. The company has recently been on the news after share drop and rebound of its share price within a week. Yet, throughout all these price movement, Buffett has shown no sign of worry and no sign of selling his investment. This is because he views the investment as a business that might one day change the world’s transportation system. As long as that goal continues to seem possible, there is really no reason for Buffett to sell his investment regardless of how volatile the share price might be.

Perhaps this is something we all can learn from the Oracle.  Merry Christmas everyone, and Happy New Year.

 
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All views and opinions articulated in the article were expressed in Stanley Lim’s personal capacity and does not in any way represent those of his employer and other related entities. Stanley Lim does not own any companies mentioned above.

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