Investor Warren Buffett has offered this piece of advice to individual investors. Unless you can watch your stock holdings decline by 50% and not become panic-stricken, you should not be investing in stocks.
That is a very powerful statement and it should give all investors something to think about.
He also felt the individual investor could absolutely find better returns on his money than a institutional investor. When I say an institutional investor, I mean organizations who pool large sums of money and invest those sums in securities, real property and other investment assets.
Why is this the case? Because most institutional investors could not sit out a decline in the market of 50% without behaving erratically. Their collection of individual investors would be losing their minds over such a loss.
You, on the other hand, if you could handle such a dip in the stock market, as long as you made your investment choices based on sound business principles, you could easily come out a winner in the long haul.
Warren felt individual investors are at a disadvantage if they have to sell their stock at an unfavorable time.
So before you buy that stock, make sure you are prepared, mentally and financially to ride out the short-term market fluctuations, because they will come.
That is a very powerful statement and it should give all investors something to think about.
He also felt the individual investor could absolutely find better returns on his money than a institutional investor. When I say an institutional investor, I mean organizations who pool large sums of money and invest those sums in securities, real property and other investment assets.
Why is this the case? Because most institutional investors could not sit out a decline in the market of 50% without behaving erratically. Their collection of individual investors would be losing their minds over such a loss.
You, on the other hand, if you could handle such a dip in the stock market, as long as you made your investment choices based on sound business principles, you could easily come out a winner in the long haul.
Warren felt individual investors are at a disadvantage if they have to sell their stock at an unfavorable time.
So before you buy that stock, make sure you are prepared, mentally and financially to ride out the short-term market fluctuations, because they will come.
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