Warren Buffett Warns 'Don't Watch The Market Closely' — Urges Not To Obsessively Check Stock Prices If You Want 'Very Good Results'

Patience is a cornerstone of successful investing, a sentiment strongly advocated by Berkshire Hathaway Inc. Chairman and CEO Warren Buffett. His guidance to investors is straightforward: “Don't watch the market closely,” reflecting a belief in long-term growth instead of reacting to short-term market fluctuations.

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Buffett’s advice is important for people focused on retirement savings. He challenges the common tactic of market timing — frequently buying low and selling high — as not necessarily yielding the best results. In a 2016 CNBC interview, he elaborated on the pitfalls of reactive trading.

“If they're trying to buy and sell stocks, and worry when they go down a little bit — and think they should maybe sell them when they go up, they're not going to have very good results," he said.

Emphasizing his investment philosophy, Buffett shared an analogy about investing in local businesses.

"If you had a chance to buy into a good company in your hometown — and you knew it was a good company and knew good people were running it, and you bought in at a fair price, you wouldn't want to get a quote every day," he said.

He argued that investors should focus on earnings and dividends over time as the true measures of a sound investment rather than obsessively checking stock prices.

He described publicly traded shares as "little pieces of businesses” and said that “the businesses are generally pretty darn good," highlighting the importance of viewing stock investments as long-term business partnerships rather than quick trading opportunities.

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This philosophy roots itself in the principle of goal-based investing, which suggests that investment strategies should be closely aligned with an investor’s personal financial goals and time horizons. Such alignment suggests that for long-term objectives like retirement, investors should avoid making decisions based on short-term market movements.

Buffett’s strategy emphasizes that frequent trading in response to market volatility can be detrimental. The costs incurred — from transaction fees to potential taxes and missed growth opportunities — can significantly reduce overall investment returns. Additionally, the emotional stress of attempting to time the market can negatively affect an investor’s quality of life.

Strategies like value investing, which often involve enduring periods of underperformance, require a commitment to long-term goals and accepting temporary setbacks. This approach is vital during market downturns when the impulse might be to secure short-term gains from safer assets like treasuries.

Historical trends suggest that some of the best investment returns follow significant declines. Remaining invested through these downturns, rather than capitulating to fear, can position investors for substantial recoveries.

While adopting Buffett’s long-term investment strategy, it may also be wise to consult with a financial adviser. A professional can provide personalized advice tailored to individual financial situations and goals. An adviser can help navigate the complexities of the market, aid in maintaining a disciplined approach during volatility and ensure that investments align with both immediate needs and future aspirations. This guidance can be invaluable, especially for those new to investing or managing significant assets or complex portfolios.

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*This information is not financial advice, and personalized guidance from a financial adviser is recommended for making well-informed decisions.

Jeannine Mancini has written about personal finance and investment for the past 13 years in a variety of publications including Zacks, The Nest and eHow. She is not a licensed financial adviser, and the content herein is for information purposes only and is not, and does not constitute or intend to constitute, investment advice or any investment service. While Mancini believes the information contained herein is reliable and derived from reliable sources, there is no representation, warranty or undertaking, stated or implied, as to the accuracy or completeness of the information.