Investor Warren Buffett has said on many occasions that 'Time is the friend of the wonderful company, the enemy of the mediocre.'
What he meant by this was over time, the value of a company's stock is related to the underlying economic value of the company. As a company's economic value increases over time, so to will it's stock price. On the flip side, if a company is losing money, over time the value of it's stock will decline as well.
Over a shorter period of time, the value of a company's stock will rise above and fall below it's business value based on the emotional state of it's investors. But the key, he feels to success, when it comes to investing is to buy and hold a company over a long period of time, to minimize the effect investor emotion has over the company's stock value.
If aren't going to buy and hold a stock for 10 years, don't bother purchasing it in the first place.
What he meant by this was over time, the value of a company's stock is related to the underlying economic value of the company. As a company's economic value increases over time, so to will it's stock price. On the flip side, if a company is losing money, over time the value of it's stock will decline as well.
Over a shorter period of time, the value of a company's stock will rise above and fall below it's business value based on the emotional state of it's investors. But the key, he feels to success, when it comes to investing is to buy and hold a company over a long period of time, to minimize the effect investor emotion has over the company's stock value.
If aren't going to buy and hold a stock for 10 years, don't bother purchasing it in the first place.
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