Warren Buffett: If You Have To Closely Follow A Company, You Shouldn’t Own It

Johnny HopkinsWarren BuffettLeave a Comment

In this interview with Andy Serwer, Yahoo Finance Editor-in-Chief, Warren Buffett says, “If you have to closely follow a company you shouldn’t own it!”. Here’s why:

Andy Serwer (AS): Let’s talk a little bit about Apple. Everyone always wants to talk about Apple right. It’s kind of the ‘it’ stock, ‘it’ company. You have a forty five billion dollar stake, more or less, how closely do you follow the company? You know people are concerned they haven’t really introduced any new products.

Warren Buffett (WB): Well if you have to closely follow a company you shouldn’t own it!

AS: Really?

WB: If you buy a business. If you buy a farm, do you go up and look every couple of weeks to see how far the corn is up? Do you worry too much about whether somebody says this is gonna be a year of low prices because it’s exports are being affected or anything like that? No. You buy a farm and you hold it. I got one farm that I bought in the 1980’s and my son runs it, but I’ve been there once.  I mean it it doesn’t grow faster if I go and stare at it. I can’t cheer for it. More effort! More effort! Or something like that.

WB: I know there’s going to be some years when prices are gonna be good. Prices aren’t gonna be good. I know there’s years when yields will be better than others. I don’t care about economic predictions or anything of the sort. I do care that over the years it’s well tended to in terms of rotating crops and I hope yields get better, which they generally have. In fact that farm a hundred years ago would have probably produced 30 bushels, maybe 35 bushels of corn per acre. Now on a good year it’d be 200.

WB: I mean we’ve really made progress in this country, that’s one reason commodity prices, go back a couple hundred years they’ve moved so little because we’ve just gotten better and better at whether it’s cotton or whether it’s corn or soy beans. All kinds of things. You and I have benefited from that.

AS: So Apple is kind of like a farm?

WB: It’s a long term investment. If you owned the best auto dealership in town, the best brand, and had someone good running it, you wouldn’t drop by every day and say how many people have come in today? Or, I think interest rates are going up a little, maybe that’ll slow down our sales or anything.

WB: No. You buy it knowing there’s 365 days a year and you’re gonna own it for 20 years. So that’s 7,300 days. Things are gonna be different from day to day. You shouldn’t buy it if the day to day stuff is important!

You can watch the entire interview here:

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