Warren Buffett has often remarked that the best holding period is forever. But to hold forever means to do nothing forever. It is hard to do nothing! In a fast paced world bursting with information, it is just a matter of time until we get the itch to do something.
Warren Buffett, Elon Musk, and Peter Lynch are among a handful of great investors. They’ve built enormously successful holding companies, businesses, and mutual funds such as Berkshire Hathaway, Tesla, and Fidelity’s Magellan Fund.
However, it is crucial to recognize that what they did not do played a key role in propelling them to where they are today. Their investing styles are eerily similar. They buy and hold for a very long time.
For example, Coca-Cola is one of Buffet’s all-time greatest investment decisions. It turns out that Coca-Cola is also the stock that Berkshire Hathaway has held the longest. Buffett purchased his first Coca-Cola shares in 1988. By 1989, Coca-Cola represented over 20% of Berkshire’s net assets. Since 1988 the stock has climbed ~2800% including dividends reinvested. This year, Berkshire’s 400 million Coca-Cola shares will bring in about $670 million in dividends. Buffet has never sold a single share.