Having Faith In Your Holdings

Having Faith In Your Holdings

Josh Brown recently re-posted a great piece on Warren Buffett and the fact that he didn’t sell during the quick downturn of the late 90s.  The conclusion drawn is that his temperament was the difference-maker as to why he didn’t sell when everyone else was.  I wholeheartedly agree with Josh’s assessment.

But I’ll add to it as well.

The fact was, that Warren Buffett had full faith in the companies that he owned.  Nothing about what was going on in the world could impact the faith that he had in the companies that he actively invested in.  This was true regardless of whether he owned the entity outright or was a publicly traded company.

He had faith in himself that he did thorough homework on the financial stability of the entities he bought.  He had full faith in the leadership of each respective company.  He would not have bought them otherwise.  There was nothing in the headlines that could override that perspective.

Having faith in the future of the businesses that you invest in is critical to maintaining the long-view.

If you are an indexer, then you must maintain the long view that the great companies of America and the world, as Nick Murray refers to them, are going to do well in the long run.

If you are an individual stock picker, then you need to maintain faith in your research.  You must know that the due diligence that you’ve done was sufficient and as accurate as possible.  You must have faith in your homework.

If you are a mutual fund investor, you must have faith that the managers you’ve chosen are purchasing companies with good financials and good management.

No matter your specific investment strategy, you must be able to maintain discipline and patience that the strategy you’ve chosen will work out in the end.  Maybe not in the next month or year, but in the long-run.  That faith will likely be the difference between success and failure.

Temperament is key, but having faith in your holdings is a big reason for that temperament.



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