Quote of The Day From Warren Buffett

If you buy things you do not need, soon you will have to sell things you need.

This quote likely comes from experience because I can relate. When I was trading stocks on a daily basis I also used margin. On days where the markets drop significantly my positions will have to be sold to cover my margin. Certain stocks were more liquid than others therefore I was only able to sell stocks that were more liquid, but it was not my ideal trade and the sell price not ideal. I had no control at the end of the day as I needed the cash to cover my margin or get penalize.

In terms of what Warren Buffet maybe thinking when speaking the quote may likely be why some corporations went bankrupted.

Did you know that at one time Sears was the largest retailer in the world? That was back in 1969. During that time Sears was so dominant its sales represented 1% of the entire United States economy with two thirds of Americans shopping there.

A retail giant in the USA that declined and later filed for bankruptcy is Sears. They owned a lot of assets beyond just being a retail store. Brand names to this day still familiar with many are working tools Craftmans and batteries Diehard.

During Sears lasts few years of survival they sold the brands Craftsmans and Diehard to get cash and sustain itself. It would only be a few years after the sales of the companies did Sears file bankruptcy.

Conclusions

Sears is a good example of Warren's quote because the company in its prime were buying and merging with other companies that only stretched its resources rather than make benefits. Its merger with Kmart in 2004 and within a few years had to go through the Great Financial Crisis. Then came lock down of 2020 with pre-covid that basically put its retail stores out of any walk in customers. The bottom line was Sears did not have the cash it needed to survive when it needed it the most. In order to survive they sold what had valued while held onto what did not.

Bet you may have experience this before. Where you wanted to buy something only later to have to sell something you really wanted more just so that you could meet ends meet. Wise words from Warren to remember. Do not buy things just because you have FOMO or think its a deal when down the road you may need the money to pay for rainy days.

None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!

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