Michael J. Mauboussin & Coffee Can approach – Long term investing


Michael J. Mauboussin & Coffee Can approach – Long term investing

I recently read an excellent collection of articles on the subject “Investment Myths” from the latest edition of ‘Wealth Insight’ – one of the best investment magazines I regularly read – published by valueresearchonline.com

One of the topic was about Long term investing and how it is perceived today by many as an impossible one, which is wrong.

In this topic I came across an excellent piece of information wrote by Michael J. Mauboussin.

Given below the text as is from the magazine.

The Coffee can approach

Michael J. Mauboussin, earlier Chief Investment Strategist at Legg Mason Capital Management wrote about the coffee can approach to investing. This was a real-life story about an investor in the US who would buy $5000 worth of stocks and put their share certificates in a safe deposit box. Sitting in the box, the investor did nothing about them.

After his death, it was found that some investments turned into losses and were valued at $2000, many others were valued at over $100,000 and one investment had gained a value of $800,000.

This real-life story will elicit different reactions among different individuals. Some would say you cannot buy-and-forget; some others would reminisce that is what their fathers did. But the key lesson is not buy-and-forget. Rather that, it is wise not to get carried away with market fluctuations and stick to your investments. This is the essence of Buffett’s investing style. “Lethargy bordering on sloth remains the cornerstone of our investment style” (Berkshire Annual letter 1990).
Please provide your thoughts on this approach, and if you have come across any real life happenings like these, – (it could be a positive or negative – that is, buy and forget – lead to gains or even losses) – please share with us in this discussion.

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