May 6 was not the best of days for investors. Stocks dropped sharply as a ripple effect of President Trump’s comments that the States would increase tariffs on imported goods from China.
Warren Buffett, multibillionaire and CEO of Berkshire Hathaway, naturally had to weigh in on the situation, stating that an increase in the trade dispute between the two countries could lead to adverse effects that could spread throughout the global economy.
However, the CEO reiterated that current events never influenced his investments decisions in the past, and they were not going to in the future either.
The Cheaper the Better
Regardless of the effects of the President’s comments, Buffett insists that his company will continue acquiring the stocks they intended to even before POTUS made his remarks.
For him, the current economic situation is somewhat of an advantage because the market rates are dropping significantly. During an interview with Becky Quick (CNBC), the magnate said that the cheaper the stocks became, the more he would buy them, no matter the outcome of the trade war.
For him, being an investor has more to do with the stock prices than current geopolitical conditions. He also added that he doesn’t buy stocks hoping that they’ll shoot up in the immediate future.
His investment moves are almost always long term. As he revealed to Quick, it isn’t about the following month, quarter, or year – he acquires stock believing that the company will bring good business at least a decade down the line.
As such, the man said to be the third wealthiest in the world, is simply ignoring the tariff crisis and going about his business just as he usually does.
Despite a sharp drop in the stock market earlier in the month, he was fully confident that he would invest in anyone who brought him a company worth pouring his money into.
Tried and Trusted
And the man’s sentiments align with how has been handling investments for decades. Back in 1972, Buffett and Charlie Munger acquired See’s Candies for $25 million. By 2014, the company was making $100 million annually. Not a bad return, right?
Buffett still owns a share of See’s Candies, cementing his long term investment claim in the company. In 1988, the entrepreneur spent $1.3 billion buying Coca-Cola shares. He eventually stopped investing in the company in 1994, but by then his investment was already worth $5.1 billion.
Fast forward to 2014, and it had multiplied to $16.5 billion. And whatever the amount it is at now, Buffett must look back and thank his wits for this investment.
In 1996, Buffett penned a letter to his company’s shareholders, advising them on the best way to make the highest possible returns on their investments.
He asked them to do their due diligence and earmark companies that register increased aggregate earnings each year. With a credible record of improved annual earnings, Buffett explained that the companies’ market value would also march upward. And these, he said, were the companies to put their money on.
His 10-year rule didn’t come the other day, as in this letter he reiterated that if they were not ready to own a company’s stock 10 years down the line, it wasn’t worth the trouble owning it even for 10 minutes.
