Warren Buffett on the perils of market timing

Warren Buffett believes trying to time the market is a waste of time and hazardous to investment success.

The Oracle of Omaha explained why investors should avoid market predictions during Berkshire Hathaway’s annual shareholder meeting in 1994, obtained through the CNBC Warren Buffett archive.

“I never have an opinion about the market because it wouldn’t be any good and it might interfere with the opinions we have that are good,” Buffett said. “If we’re right about a business, if we think a business is attractive, it would be very foolish for us to not take action on that because we thought something about what the market was going to do. If you’re right about the businesses, you’ll end up doing fine.”

Warren Buffett Bill Pugliano | Getty Images Warren Buffett

Buffett said it is a “mistake” to not invest in a great company due to market worries.

The billionaire shared he first started buying stocks in 1942 as an 11-year-old during a troubled point for the U.S. in World War II. He cited scary developments over the decades from major wars, atomic weapons, massive inflation and periods of political turmoil. If an investor avoided the market because of these macro concerns, he or she would have missed out on large equity gains.

Counterintuitively, Buffett said the worst environment for a long-term investor is a surging stock market.

“The best thing that can happen from Berkshire’s standpoint over time is to have markets that go down a tremendous amount,” he said. “We are going to be buyers of things over time. And if you’re going to be buyers of groceries over time, you like grocery prices to go down. What we fear is an irrational bull market that’s sustained for some long period of time.”

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