I'd buy Commonwealth Bank of Australia (ASX: CBA) shares, CSL Limited (ASX: CSL) shares and Washington H. Soul Pattinson & Co. Ltd (ASX: SOL) shares, at the right price.
The price must 'make sense'
As can be seen above, the CBA share price, WHSP share price and CSL share price has run higher in recent years.
Unfortunately, savvy investors must have a keen eye for the 'worth' or value of a company's shares if they want to achieve market-beating returns.
As Charlie Munger, Co-Chairman of the $540 billion Berkshire Hathaway, says, "no business is worth an infinite".
Therefore, although I would love to buy these three companies' shares today, I'm also aware that the valuation of these companies is important. In my opinion, none of them is a 'bargain' today.
Nonetheless, here's why I'd buy and likely never sell CSL, CBA and WHSP shares.
CSL
CSL is a biopharmaceutical giant, making life-saving blood plasma products and vaccines for a global client base. Given the regulatory environment and proprietary nature of CSL's market and products, respectively, the sales CSL generates are very reliable. Not only that, it earns great profit margins. In my opinion, it is likely the best company in Australia!
CBA
Bank shares and profits rise and fall dramatically, which is why you should always be patient when you are considering investing a bank. Fundamentally, banks are essentially mandated by society to make a profit. For example, if CBA didn't make a profit, its borrowers, deposit holders and the government would be deeply concerned.
I think CBA shares are overvalued but if I could buy it at a discount to its intrinsic value I would be very unlikely to sell it. You may get an opportunity to buy CBA very cheap during the next market crash. For example, during the GFC it fell from around $60 to $24 in 14 months. Those are the types of environments when a shrewd investor will buy bank shares.
WHSP
'Soul Patts' is a great business because it is well run and essentially takes care of its shareholders' investing decisions. WHSP has achieved exceptional returns for investors over the past 40 years by holding large chunks of ASX-listed and private companies.
However, I think it is too expensive to buy today.
Foolish Takeaway
Most investors forget this:
You don't make money from selling shares — you make money from holding them.
Find great businesses, buy them at good prices and avoid selling.
Having said that, it's vital to consider risks. For example, if an investor held more than 30% of their portfolio in bank shares right now, I'd say they are completely nuts.
