194 THE WARREN BUFFETT WAY
outstanding business for a number of years, what happens in the market
on a day-to-day basis is inconsequential. You doneed to check in regu-
larly, to see if something has happened that presents you with a nifty
opportunity, but you will f ind that your portfolio weathers nicely even
if you do not look constantly at the market.
“After we buy a stock, we would not be disturbed if markets closed
for a year or two,” says Buffett. “We don’t need a daily quote on our
100 percent position in See’s or H.H. Brown to validate our well being.
Why, then, should we need a quote on our 7 percent interest [today,
more than 8 percent] in Coke?”^7
Buffett is telling us that he does not need the market’s prices to vali-
date Berkshire’s common stock investments. The same holds true for in-
dividual investors. You know you have approached Buffett’s level when
your attention turns to the stock market and the only question on your
mind is: “Has anybody done anything foolish lately that will give me an
opportunity to buy a good business at a great price?”
Step Two: Don’t Worry about the Economy
Just as people spend fruitless hours worrying about the stock market
so, too, do they worry needlessly about the economy. If you f ind
yourself discussing and debating whether the economy is poised for
growth or tilting toward a recession, whether interest rates are mov-
ing up or down, or whether there is inf lation or disinf lation, STOP!
Give yourself a break.
Often investors begin with an economic assumption and then go
about selecting stocks that f it neatly within this grand design. Buffett
considers this thinking to be foolish. First, no one has economic predic-
tive powers any more than they have stock market predictive powers.
Second, if you select stocks that will benef it by a particular economic en-
vironment, you inevitably invite turnover and speculation, as you contin-
uously adjust your portfolio to benef it in the next economic scenario.
Buffett prefers to buy a business that has the opportunity to prof it
in any economy. Macroeconomic forces may affect returns on the mar-
gin, but overall, Buffett’s businesses are able to prof it nicely despite va-
garies in the economy. Time is more wisely spent locating and owning
a business that can prof it in alleconomic environments than by renting
a group of stocks that do well only if a guess about the economy hap-
pens to be correct.