Does It Pay To Follow Buffet Blindly?

Warren Buffett, the student of the now famous father or value investing Ben Graham, is the greatest stock investor of our times. He has built his flagship company, Berkshire Hathaway (BRK.A) from a small mill to a diversified conglomerate with a total market cap of 175 billion dollars. His company holds a wide portfolio of over 30 individual stocks traded on US exchanges in addition to many private companies like Nebraska Furniture Mart and Geico. Despite the fact that it is generally not recommended to follow guru’s advice blindly without doing your homework, researchers have proven the fact that mimicking Berkshire Hathaway’s stock portfolio would have yielded tremendous gains over the past 30 years.

Below you could find Berkshire Hathaway’s stock holdings as of 6/30/2008.

Comments

[razorfangius:]

Buffett has two t's ... check headline ...

2008 Oct 24 11:30 AM

[Warm_Paw:]

Buffet jumping into GE and GS may have been window dressing.
The Fed is pulling out all the stops and Warren buying means turn around to many investors.
Notice he bought two stocks which are strong enough to weather this situation. I doubt his money would be in risk at this point in time.
GS is the only financial institution floating during this time and GE is an American mainstay.

2008 Oct 24 11:47 AM

[User 265729:]

Don't get me started about the Buffett Burger...

As Warm_Paw said, he is nothing more or less than a "poster boy" in an effort for Bush-Paulson to gain support for this scheme that they are calling an economy. You know things are really pathetic when Warren is out there telling people to buy stocks... After you Oracle of Omaha!

Warren Buffett is out there working with Bush and Paulson in an effort to talk the stocks up, just these talking head-types talked the housing market into a balloon.

The stock market, in my opinion, knowing what I know about the actual value (push comes to shove - margin call) the Dow should be at about 4,000 to 5,000 as fair value. The 9,000 that will be peeled away, is nothing more than hype from Madison Avenue meets Wall Street marketing. Hype and more hype... One giant confidence game that is on the fall and it may take Buffett with it...

Here is some good advice for Mr. Warren Buffett:

1.) Invest and develop a chain called the Spam Stores -- they will sell tinned meat at a reasonable price to the hundreds of millions of people in poverty.

2.) Create a family food chain called the Mac-N-Cheese Market -- then name speaks for itself.

3.) Perhaps a Soup and Cracker Cafe -- I hear you could get a great deal on all of the Starbucks that close.

As I've said before Warrenn, don't lie on the Food Stamp application and don't cut in the coup kitchen line!

2008 Oct 24 02:06 PM

[User 265729:]

"...mimicking Berkshire Hathaway’s stock portfolio would have yielded tremendous gains over the past 30 years."

Ya! Let's see what you have to say in 30 days from now!

2008 Oct 24 02:08 PM

[Dividend Gr...:]

Actually I probably should have added that one shouldn't follow BRK.A blindly. I believe that investors should do their own homework before they trade any stocks. For example I have not been comfortable initiating a position in USB because of its high payout ratio.

It's never a good idea to purchase something jsut because a guru is telling you that he/she purchased it because you might end up the last to be informed when the guru starts selling.

2008 Oct 24 03:58 PM

[polo-marco:]

I think it's wiser to invest looking at 30 years timeframe rather than 30 days.

2008 Oct 24 05:36 PM

[hungryneck:]

GS is going to be cut in half from these levels. GE is going to be split up, so it may be a great deal at this point.

2008 Oct 24 05:48 PM

[Mountain Fist:]

I spent a lot of time studying Ben Graham and Warren Buffet, but that Buffett announcement made me lose respect for Mr. Buffett. Trying to talk up buying of stocks because even some of his positions are beginning to be underwater is pretty close to criminal in nature. At it's very least it's taking advantage of a lot of small investors who give too much weight to what people like Buffett say. By now, Buffett knows the effect that things he says has on markets.

Anybody that can read long term charts of the Dow, Nasdaq, S&P 500, or individual stocks can see that it could easily get a lot worse (stock prices). I wouldn't be following Buffett right now, I'd wait awhile longer and buy for less than him. There are stocks I like that Buffett has already owned for a year or two that are trading under his best purchase price ever, and even farther below his average purchase price.

If I can watch them slide and get them for half what Buffett bought them, why would I want to watch his self-serving release---"It's time to start buying stocks because they are dropping below my purchase price and everyone knows I'm smarter than the rest of the market", and then start buying stock?

2008 Oct 24 08:16 PM

[PDC (Rookie):]

I am in no way trying to be rude or disrespectful. I am new to this game and will agree a bit nieve. My thought is with no disrespect meant at all but in terms of Mr. Buffett's health would it be irrational to take a put option in case of something just naturally happening. Am I incorrect or would not the stock see a drop? I am not trying to be an a-hole and do not have much information of the structure of his company in regards to the officers below him. Is it too much a risk to option this stock since it is not gonna happen for any near time ahead. Again I apologize if I was disrespectful in any way or offended anyone with my question but I am honeslty just trying to hear comments to an idea. I would appreciate any response to me question. Thank You

2008 Oct 24 11:47 PM

[formerhawk:]

A few nevers:
Never have all of your money in one place.
Never let any one person or group manage all of your money.

And most important never follow any person blindly!

2008 Oct 25 08:05 AM

[countrybanker:]

anyone have the analysis showing BRK net asset value(at market prices) versus total market capitalization ob Berkshire Hathaway.

2008 Oct 25 09:29 AM

[notsosmart:]

first you cant make his kind of deal. second ,as an individual you cant the info he can.third,the info you can get you cant rely on as mostly bs.lastly,the world has changed & he is an old man.his ways may no longer apply over the long run.if you still believe in him simply buy brk.

2008 Oct 25 12:47 PM

[Errol:]

Wow! I've never seen commentary so battering of any type of analysis...says something about the author.

2008 Oct 25 03:46 PM

[notsosmart:]

no -says something about the readers.

2008 Oct 25 05:56 PM

[PDC (Rookie):]

Errol, it seams your last comment may have been directed towards my comment. Do not appreciate you finding a reason neccesary to make a comment putting me down. I have an idea, reread my comment in parenthesis next my name and my second sentence where I stated my experience or knowledge in the industry. I am not trying to be something that I am not. Which is oppsoite of the direction you take in attempting to be. I have taken a look at your previous comments you've added and it seems the reocuring fact is that you somehow consider yourself an authority or genius in this field. I find it very hard to believe that the real ballers making money would even take time to read this blog. People making the real money have better things to do then give any input when they are not gettting paid for it. Honestly, please don't think again that a loser like yourself, and a fake should ever feel they are right to ridicule anyone who is not trying to overstate themselves. Your a fool, learn to read, and look out for the guy next to you. Be yourself.

2008 Oct 25 09:29 PM

[PDC (Rookie):]

Not So smart,
Thank you for taking the time to respond w/ postive input. A lot of time there are complete losers out there who do not take the time or even worse respond negatively to open questions. I appreciate any advice to help me grow in MY EARLY YEARS, WHICH I ATTEMPTED TO LET EVERYONE KNOW. You would not believe that even though I explained I have very little knowledge that there are still some real pieces of sh*t that look to put you down. Thanks again for not being a dick like the other guy chose to be.

2008 Oct 25 09:44 PM

[directcommu...:]

Its good to follow, but also stops and puts to hedge any major pulls to prevent overall loss.

2008 Oct 25 10:29 PM

[Did U Think...:]

Buffet has become a shill for the establishment. Did you see his pollyanna attitide in the econo-documentary IOUSA? The man simply doesn't give a crap about American citizens anymore. He is talking up the book of his elitist owners.

2008 Oct 25 11:30 PM

[Errol:]

PDC,
Those comments weren't directed towards you at all....take some medication for your paranoia.

2008 Oct 26 06:07 PM