The first book that I ever read on investing was “The Warren Buffet Way” by Robert Hagstrom. This was shortly after I stumbled upon his company, Berkshire Hathaway (BRK.B: NYSE). The book is now on it’s Third edition. There were two takeaways from the book – buy what you understand and the value of long term investing.
Buffett never invested in things that he did not understand. He liked businesses that were simple to explain and understand. Coca Cola (KO:NYSE) was one of the stocks referenced in the book and was a core holding for Berkshire. Buffett was also a big fan of Cherry Coke, so, he bought what he knew as well. While this strategy has obviously reaped huge rewards over the decades, it has also caused him to miss out on others. He recently admitted missing out on Google (GOOGL:NASDAQ) because he didn’t understand the company.
Another tenet was the appreciation of holding stocks for the long term. I believe that he referred to his process as “Sloth-like”. If they went a year without making any changes to the portfolio, then so be it.
Seems reasonable to me.