People tend to parrot Warren Buffett too often. One of my pet peeve "Buffet-isms" is "our favorite holding period is forever". We as humans cannot gauge the future, how the economy will shift, what new technologies will arise, or how consumer preferences will change.
The important message from Warren Buffett is that it is good to have a long term holding period, but personally I think this should be much shorter than 'forever'. You don't want to focus on quarterly performance and overtrade, so a good middle ground is 5-10 years.
A good example of a company that shifts, GAP.
What they sold was just not in fashion anymore. Management, no matter how skilled, cannot fight this trend.
GAP could have been a great buy 10 years ago. But its a very different world now.
The important message from Warren Buffett is that it is good to have a long term holding period, but personally I think this should be much shorter than 'forever'. You don't want to focus on quarterly performance and overtrade, so a good middle ground is 5-10 years.
A good example of a company that shifts, GAP.
What they sold was just not in fashion anymore. Management, no matter how skilled, cannot fight this trend.
GAP could have been a great buy 10 years ago. But its a very different world now.
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