Many investors today have become fat, dumb, and stupid. They’re speculating with the expectation that they’ll always win. In his recent letter to shareholders, Warren Buffett called out such gamblers. Business Insider’s Theron Mohamed reports:
Buffett also criticized speculators in his letter, noting that stock traders are “neither more emotionally stable nor better taught” than when he was a student. He also noted the proliferation of stock-trading apps has made daily buying and selling easier than ever.
“Markets now exhibit far more casino-like behavior than they did when I was young,” he said. “The casino now resides in many homes and daily tempts the occupants.”
Along the same lines, Buffett said that he imagines Berkshire shareholders to be long-term holders, not people who use their spare cash to “purchase lottery tickets or ‘hot stocks.'”
Mohamed also pointed out Buffett’s praise of long-term investing, writing:
Echoing last year’s letter, the centibillionaire hailed Berkshire’s large stakes in Coca-Cola and American Express, which it hasn’t touched in over two decades, as emblematic of his company’s long-term investing style.
Buffett also praised Occidental Petroleum, which he’s built a nearly 28% stake in from scratch within the last two years. He trumpeted the oil-and-gas explorer and producer for supporting US energy independence and pioneering carbon-capture methods.
He also shouted out Berkshire’s roughly 9% stakes in five Japanese trading houses, which he started amassing back in July 2019. He celebrated their restraint in compensating executives, their discipline in paying dividends, and their long-term, conservative management.
Action Line: To paraphrase the words of Kenny Roger’s “The Gambler,” Buffett knows when to hold ’em. Focusing on the long term can be a valuable trait to an investor. When you want to talk about your long-term investment goals, I’m here.
