For Buffett, long run still trumps the quick return
If somebody bought Berkshire Hathaway in 1965 and they held it, they made a great investment — and their broker would have starved to death."
Warren E Buffett was sitting across from me over lunch at a private club in Midtown Manhattan last week, lamenting the current state of Wall Street, which promotes a trading culture over an investing culture and offers incentives for brokers and traders to generate fees and fast profits.
"The emphasis on trading has increased. Just look at the turnover in all of the stocks," he said, adding with a smile: "Sales people have forever gotten paid by selling people something. Generally, you pay a doctor for how often he gets you to change prescriptions."
Buffett, 82, is famous for investing in companies that he sees as solid operations and essential to the economy, like railroads, utilities and financial companies, and holds his stakes for the long run. The argument that the markets are better off today because of the enormous amount of liquidity in the stock market, a function of quick flipping and electronic trading, is a fallacy, he said.
"You can't buy 10% of the farmland in Nebraska in three years if you set out to do it," he said. Yet, he pointed out, he was able to buy the equivalent of 10% of IBM in six to eight months as a result of the market's liquidity. "The idea that people look at their holdings in such a way that that kind of volume exists means that to
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