8 January 2004
Berkshire Hathaway will start the day trading at about $86,190 per share. Level 3 Communications will start the day at around $6.32.
With the recent jump in stock prices, there are share values that are going to get out ahead of company profits. We’ve been there before. Don’t get drawn in at the wrong time or with wrong-headed notions about what it means to own a share in a public company.
These are businesses with exactly the same profit motives as the lemonade-stand in the front yard. Without those profits, a share of the stock should be worthless. If (when) interest rates go up, it is more difficult for many companies to make that earnings target.
Get in for the long haul. Don’t get in just for 2004’s jump! As Warren Buffett once said, (paraphrasing) ”I don’t think of myself as a trader of stocks, but as a collector.” Identify great businesses that you’d be completely comfortable owning in their entirety. Buy the stock. Hold it. Think like a business-owner, not a stockholder. Think like a collector, not a trader.
Filed under: Investing