Dividend Growth Investor: Buffett on Ignoring Stock Price Fluctuations and Thinking Like a Business Owner

With markets hitting new all-time highs, it’s easy for investors to get caught up in the excitement. That could mean turning a blind eye to market dangers, and being blindsided by the next market pullback.

That makes now the time to step back from the market price action and look at the fundamentals. That means that investors could step back from thinking of the market as delivering ever-higher prices.

One strategy that can help investors during periods of market greed is to think in terms of investing in a business. That’s an approach value investors employ.

For instance, investors know of Warren Buffett’s expertise for value investing and owning shares of great companies. But he also owns entire businesses. And holding those businesses over decades allows them to become valued at multiples of what they were originally worth.

As that happens and the business grows, the cash payout related to those businesses can grow as well. That’s why Buffett’s investment in Coca-Cola (KO) over 35 years ago now pays about $776 million in cash each year.

But that rule can also apply to a private business, or a piece of real estate. Bought right, investors can hold a great investment nearly indefinitely. Or, in other words, if you don’t look at the price too often, it will take care of itself over time.

To read the full examples of Buffett businesses that have provided great returns, click here.