In recent weeks, the admired king of investing, Warren Buffet, surprised many in the investing world by announcing Berkshire Hathaway’s purchase of Burlington Northern Rail Road. When asked recently why he chose this investment, Warren quipped that when he was six, his father would not buy him a train set for Christmas!
On a more detailed response, Mr. Buffet believes there is significant value in the company, and 20 years in the future, he feels there will be more Americans shipping products and goods around the country. Additionally, since he believes trains are “Green” because they can move so much product hundreds of miles on a single gallon of diesel fuel, he feels certain the company will provide significant growth and profits in the future.
Clearly, Warren has a long-term perspective when it comes to investing. Even though he is 79, he is still looking not at next quarter or next year, but often at the next decade. He continues to look to the future to understand the potential direction of the economy, business, and possibly Government actions, and then he selects businesses that if run well, should prosper. This action and strategy has enriched not only him but also thousands of investors who own shares in his company or follow his moves.
Unfortunately, the average investor is more worried about the changes in their account from one month to the next than the overall direction of their strategy. It may be this short term view that prevents most investors from truly accumulating significant wealth.
The moves in the investment markets this year were a clear test of many investor’s fortitude as well as strategy. Even today, there are hundreds of advisors who have kept their clients out of the market for the past several months, although we were not one of them. Many investors without advisors also made the same election. However, with 20/20 hindsight, it is very rare for the investment markets to provide the opportunities we have experienced this year. While these opportunities arrived after a severe drop in the investments markets, this is generally when great opportunities can be found. Provided the view point is “long term” rather than “short term,” these opportunities may be easier to see.
For help with estate planning and managing investment assets, contact me at Quality Financial Concepts or one of the other Certified Financial Planners in our area. To continue a personal quest for education, you can also view our website, www.goqfc.com. There you will find articles on a variety of topics, on-line seminars, calculators, as well as a host of other tools all available for free.