Buffett on Reviewing Your Portfolio

Investors and businessmen are constantly looking toward the Oracle of Omaha for advice on what stocks to buy, when to sell, and everything in between. With a portfolio as diverse and profitable as Berkshire Hathaway’s, it’s no wonder that the CEO and president, Warren Buffett, is often considered the most successful investor of all time.

With the idea of sharing knowledge in mind, Buffett opens the floor to questions every year at his Berkshire Hathaway shareholder meeting. When asked how often he reviews his portfolio, Buffett has to split his answer up to fit the two parts of his life: one answer for when he didn’t have billions of dollars at his disposal, and another for his life as one of the richest men in the world

“When I had more ideas than money, I was constantly reviewing my portfolio, figuring out which stocks to unload to buy a new one… Today, I have more money than ideas so we aren’t really thinking of selling when the alternative is cash.”

When you are just starting out in the investment world, if you are using Buffett’s value investment strategy, chances are you’re looking for a good deal. When Buffett was younger and didn’t have as much money at his disposal (as few people do) he would have to review his portfolio quite often— possibly not every day, but every time he wanted to make a purchase— to keep up with his ideas. In order to figure out which stocks to sell, Buffett would have to consider if he would profit by selling or if he should wait a little bit longer, and ensure that he would be able to cover the purchase that he was looking to make. Now, things are different.

“We’re always collecting information on every company we own— it is a continuous process, but not with the idea that daily, weekly or monthly activity will result… If we needed money for a very big deal, and we had to sell $10 billion in equities, we’d use information we’ve been collecting daily to decide what to sell.”

So, while it seems Buffett and his company Berkshire have both surpassed the need to review their portfolios on any type of schedule, he still understands the importance of knowing each business you have an investment in. In fact, that’s his first filter for making an investment. Moral of the story, make sure you have an understanding of all your investments— if you’re still small scale, it will help you know which investments you need to keep and which you could probably stand to get rid of, and if you ever get as big as Buffett and Berkshire, it’ll help you make billion dollar deals in a snap.

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