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HERE’S SOME excellent investment advice: Never sell a winning share. Avoid your stockbroker’s advice to “take profits” to reinvest into something he believes will do better. In his 1993 letter to shareholders Berkshire Hathaway chairman Warren Buffett’s provided his take: “A parent company that owns a subsidiary with superb long-term economies is not likely to sell the entity, regardless of price.
"Why should I part with my Crown Jewel?" the CEO would ask.
“Yet that same CEO, when it comes to running his personal investment portfolio, will offhandedly move from business to business when presented with no more than superficial arguments by his broker. The worst of these, perhaps, is ‘You can’t go broke taking a profit.’ Can you imagine a CEO using this line to urge his board to sell a star subsidiary?
“In our view what makes sense in business also makes sense in stocks: An investor should hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.”
Just love the Oracle of Omaha’s logic.
Don't you?
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