During the 1996 Berkshire Hathaway Annual Meeting, Warren Buffett discourages the strategy of waiting for market panics to buy great companies, comparing it to a mortician waiting for a flu epidemic, suggesting it may not be a reliable investment approach. Here’s an excerpt from the meeting:
Buffett: Well I won’t comment on the three companies that you’ve named but in general terms unless you find the prices of a great company really offensive.
If you feel you’ve identified it, and by definition a great company is one that’s going to remain great for 30 years. If it’s going to be great a great company for three years you know it ain’t a great company. I mean it.
So you really want to go along with the idea of something that if you were going to take a trip for 20 years you wouldn’t feel bad leaving the money and with no orders with your broker and no power of attorney or anything and you just go on the trip and you know you come back and it’s gonna be a terribly strong company.
I think it’s better just to own them. I mean you know we attempt to buy and sell some of the things that we own that we think are fine businesses but they’re too hard to find.
I mean we found See’s Candy in 1972 where we find here and there we get the opportunity to do something but they’re too hard to find.
So to sit there and hope that you buy them in the throes of some panic you know that you sort of take the attitude of a mortician you know waiting for a flu epidemic or something I mean I’m not sure that’s a… will be a great technique.
You can watch the entire discussion here:
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