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Davis on the Reported Death of Buy and Hold

Selected and Clipper fund manager Christopher Davis says extreme market volatility has led to more turnover as security prices and values diverged, but it has not damaged the idea of long-term investing.

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Dan Culloton: I'd like to end with one more question. We've heard a lot since 2007 and 2008, a lot of people questioning whether buy and hold is actually dead. As a buy and hold investor, I think we already know your answer, but what do you think of that argument, of people questioning the wisdom of buying and holding through what has been a really harrowing market?

Christopher Davis: Well, I might surprise you in this answer, to say that buy and hold is not an investment discipline. All of what is essentially value investing is, is recognizing that there is a difference between value and price, and orienting your firm with the view that value can be independently determined through research. If the price of the business exceeds your assessment of the value of that business, you would be a seller of that business. If the price is well below what you assess the value, you would be a buyer.

Dan Culloton has a position in the following securities mentioned above: SLADX, CFIMX. Find out about Morningstar’s editorial policies.