Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Facebook Inc (FB), Knight Capital Group Inc. (KCG): NASDAQ OMX Group, Inc. (NDAQ)’s Flub Shows Warren Buffett Is Right Again

The StressTest column appears every Thursday on Check back weekly and follow @TMFStressTest on Twitter!

For a good chunk of the trading day today, investors weren’t able to trade stocks listed on the NASDAQ OMX Group, Inc. (NASDAQ:NDAQ)‘s namesake Nasdaq exchange. No buying. No selling. No shorting. You couldn’t even throw on some last-minute hedges using options. The exchange was simply shut down, and investors who owned a Nasdaq-listed stock — like Apple, Google, or, um, NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) — had to be content continuing to own it until the exchange opened back up.

While there are undoubtedly many folks intensely frustrated with this failure — which is being chalked up to a computer glitch — I can bet there’s at least one investor that hasn’t even broken a sweat. That investor is none other than Berkshire Hathaway CEO Warren Buffett.

Here’s what Buffett has famously said about stock trading and the existence (or not) of stock exchanges:

I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.

In this day and age, there’s little reason to think that an investor would be put in a position where they wouldn’t be able to unload a stock for five years. But there is good reason to think exchange glitches like this aren’t an unheard-of anomaly. A trading glitch at Knight Capital Group Inc. (NYSE:KCG — formerly Knight Capital Group Inc. (NYSE:KCG) — disrupted trading for hours on end and nearly wiped the company out. When Facebook Inc (NASDAQ:FB held its infamous IPO, computer issues at the Nasdaq caused massive problems at the open of trading. Of course, there was also the Flash Crash. And if you Google “flash crash,” you can spend days reading about a variety of other smaller glitches and flukes.

You don’t have to look far to find commentators who are pulling their hair out over this. And some businesses do have reason to be concerned — if a brokerage can’t trade Nasdaq-listed stocks for multiple hours during a day, they don’t make money. Yet I can’t seem to get my blood pressure up over episodes like this.

The bottom line is that Buffett has it exactly right. When investors buy a stock, they’re not buying a piece of paper, they’re buying an ownership stake in an operating business. The Motley Fool has espoused this for more than 20 years now. In fact, if you hear a reference to the idea of “Foolish investing,” this concept of owning business stakes as opposed to trading slips is absolutely central to that.

The trading snafu with Facebook Inc (NASDAQ:FB)’s IPO caused a lot of confusion. But what it didn’t do was impact the business. The ability to swap claim checks on the business was disrupted, but the massive, growing social networking business that connects individuals all over the globe wasn’t. Likewise today, even though traders may not have been able to sling Google shares for a few hours, that had nothing to do with the business’s operations or ability to continue taking over… well, most aspects of our online lives.

So, go ahead and take note of what went on today on the Nasdaq exchange. But unless you’re a Nasdaq shareholder — since this is a business issue for Nasdaq — feel free to flip back up to the quote from Warren Buffett and go right on being a content business owner.

The article Nasdaq’s Flub Shows Warren Buffett Is Right Again originally appeared on and is written by Matt Koppenheffer.

Matt Koppenheffer owns shares of Berkshire Hathaway and Apple. The Motley Fool recommends Apple, Berkshire Hathaway, Facebook, and Google. The Motley Fool owns shares of Apple, Berkshire Hathaway, Facebook, and Google.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.