Wise Wealth Advisors

D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Losing $6 billion, now worth $63 billion

Posted by Muthu on August 25, 2015

Nick Murray has written a wonderful book ‘Simple Wealth, Inevitable Wealth’. I would rate this as one of the very few books both investors and advisors must read. I read this much late in life. I would have been a better advisor had I read this book earlier.

Joshua Brown in this excellent piece cites a passage from the above book and also shares some thoughts on the same.

Please remember that there was Russian Ruble crisis in 1998 (also don’t forget; there is always some crisis or other in the world) when the below incident took place.

“$6,200,000,000

Yes, that’s right, it’s six billion two hundred million dollars.

A very large sum of money, wouldn’t you say? Now what, you ask, does it represent?

It is roughly how much Warren Buffett’s personal shareholdings in his Berkshire Hathaway, Inc. declined in value between July 17 and August 31, 1998. And now for the six billion dollar question. During those forty-five days, how much money did Warren Buffett lose in the stock market?

The answer is, of course, that he didn’t lose anything. Why? That’s simple: he didn’t sell.

Berkshire Hathaway’s “A” shares had dropped in price from roughly $80,000 per share in June to $59,000 by the end of September. These same exact shares just hit a high of $229,000 this year. Buffett knew that while the price may have been changing for his company’s shares, the value that his companies were creating would not be permanently impaired. This allowed him to wait out the ’98 episode rather than reacting to it.”

I’m extremely happy that none of you got perturbed and called me yesterday. I’m glad that we are evolving together. Though it is expensive, I would suggest buying and reading Nick Murray’s ‘Simple Wealth, Inevitable Wealth’.

Only selling in panic, which most investors do, convert the temporary declines into permanent losses.

In the long run, index and good diversified equity funds would only keep going up.

I don’t know how the short term would pan out. But in the long run, a growing economy like India is a great place for investors.

Never lose faith. In the moments of doubt, please call me. We are always there to handhold you.

2 Responses to “Losing $6 billion, now worth $63 billion”

  1. manojkr67 said

    Please let me know from where can we buy the Nick Murray’s book. It’s not available online at any of the e-com websites.

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