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Warren Buffett and Charlie Munger say the ideal holding period for a great company is forever. Arbitrary timelines like ten years push investors to sell too soon, even when the business stays excellent. Misaligned incentives drive the behavior.
Warren Buffett and Charlie Munger say the ideal holding period for a great company is forever. Arbitrary timelines like ten years push investors to sell too soon, even when the business stays excellent. Misaligned incentives drive the behavior.
Do you know what Warren Buffett and Charlie Munger said about their favorite holding period? Their favorite holding period for a company is forever. Meaning that if you find a good company, you ideally want to hold it for forever. Why would you put this artificial clock on, oh, within 10 years you need to liquidate, right? It actually doesn't make sense if you have a really great asset. You know, I understand why they need to do that. They want a return, right? So then show me the incentive, I'll show you the outcome.
