The Truth About Warren Buffett And 'Forever Investing'
17.05.12
One thing that Warren Buffett's name has come to be interchangeable with is "long-term investing." After all, the Berkshire Hathaway ( BRK.A ) CEO and Chairman is famous for saying that his "favorite holding period is forever," and his pedigree includes investments in American Express ( AXP ) and The Washington Post ( WPO ) that he made over forty years ago and still holds to this day. But I think that it's important to understand these investments within the larger context of Buffett's investment story.
When Warren Buffett first graduated from the University of Nebraska, he moved back into his parents' house and launched an investment partnership with the capital that he raised from his parents, other family members, friends of the family, and local doctors. Buffett would calculate the intrinsic value of a company, find stocks that were trading very low in relation to the intrinsic value, wait for the price gain to be realized, sell the stock, and then do it all over again. Wash. Rinse. Repeat. This was Buffett's methodology during the early years of the partnership and the first few years of when he began running Berkshire Hathaway that enabled him to earn 25-35% annual returns.
Source: Seeking Alpha
