Sometimes Eternity Does Not Work In Investing

I hear many local investors preached about Unker Buffy and used him as the role model for the buy and hold investing strategy.

Remember in an investment, one buys the stock which represents a company with the wonderful business and the idea of course is to hold on to the investment forever.

However, there are two important exceptions to this simple investing idea.

1. The stock must remain a good company. That is the wonderful business must remain intact.

Many fails to understand this simple point. Companies do go bad. For example, the fundamental economic of the business do changes and sometimes these changes are permanent, which ultimately could render a good business poor. Owners do change. Yes what should we do when owners change and the new owners are simply lacking? Why should we continue to be an investor? Shouldn't one sell when such events occur?

2. Market do really go out of whack.

Yes, they do. And this is why investors can go bargain or value happening and if they don't go out of whack, good old Unker Buffy can just retire. Needless to say, market goes out of whack, both ways. Yes they do. Stocks can be insanely cheap but they can also be insanely overpriced. Well, what do you want to do when it's insanely overpriced? Yes, sometimes selling makes logical sense.

Anyway, here's an article on CNBC showing Berkshire disposal of shares. Warren Buffett's Berkshire Hathaway Sells Lots of Kraft (And Other Stocks) in First Quarter

Well what's my point?

Warren Buffet and Berkshire do SELL their shares.

Do not misunderstand this posting. This is not a posting urging you to simply sell but rather to remind you that sometimes it does make logical sense to sell. Yes, sometimes the justification to sell the shares are real. So do not get hung up on what some bad investment advice suggesting that you should hold your shares forever, for decades.

Remember nothing last forever. Stock markets can crash, good stocks can turn bad, good stocks can be insanely overpriced. So what do you wanna do about it?

Hold it forever and ever, for eternity?

And are you even sure you that the stock you are holding, should be considered a good stock? That is, is it really a stock which has a wonderful business? What if it's a average stock? Or what if it's really below average stock? Would holding it for eternity sake help you make money from a poor investment?

And sometimes we can overpay for our investment for the so-called good stock and holding it for decades would not help and erase the fact that we did make the mistake of overpaying for our investment!

Just because some local investing sifu says so?

Remember sometimes eternity does not work in investing. Yes, sometimes.