Here is Adam Smith, author of Supermoney, interviewing Warren Buffett back in 1985. Smith asks Buffett:
“What do you do that’s different than ninety percent of the money managers who are in the market?”
Here’s Buffett’s response:
“Certainly most of the professional investors focus on what the stock is likely to do in the next year or two and they have all kinds of arcane methods of approaching that. But they do not really think of themselves as owning a piece of a business. The real test of whether you’re investing, from a value standpoint or not, is whether you care whether the stock market is open tomorrow. If you’re making a good investment in a security it shouldn’t bother you if they closed down the stock market for five years.”
“All the ticker tells me is the price. And I can look at the price occasionally to see whether the price is outlandishly cheap or outlandishly high but prices don’t tell me anything about a business. Business figures themselves tell me something about a business but the price of a stock doesn’t tell me anything about a business. I would rather value a stock or a business first and not even know the price. So that I’m not influenced by the price in establishing my valuation and then look at the price later to see whether it’s way out of line with what my value is.”
You can watch the short interview here:
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