Warren Buffett’s thoughts on marketable securities

“We ordinarily make no attempt to buy equities for anticipated favorable stock price behavior in the short term. In fact, if their business experience continues to satisfy us, we welcome lower market prices of stocks we own as an opportunity to acquire even more of a good thing at a better price,” Warren Buffett said this in his 1977 letter to Berkshire Hathaway shareholders.”

Mr Buffett said that Berkshire Hathaway’s experience has been that pro-rata portions of truly outstanding businesses sometimes sell in the securities markets at very large discounts from the prices they would command in negotiated transactions involving entire companies.

“Consequently,” Mr Buffett said, “bargains in business ownership, which simply are not available directly through corporate acquisition, can be obtained indirectly through stock ownership.”

“When prices are appropriate, we are willing to take very large positions in selected companies, not with any intention of taking control and
not foreseeing sell-out or merger, but with the expectation that excellent business results by corporations will translate over the long term into correspondingly excellent market value and dividend results for owners, minority as well as majority,” said Mr Buffett in the 1977 letter.

Recommended reading:
Berkshire Hathaway Letters to Shareholders, 1965-2013