5 Reasons to Ignore Buffett 28 comments
-
Font Size:
-
Print
- TweetThis
Within the past two weeks my neighbor, my lawyer, and my doctor each told me that Warren Buffett is suggesting that Americans buy shares in American companies. I tolerated the first two, but I really let my doctor have it today. I blurted out - “AND???” “How does that apply to me and you?” “Are you a billionaire?” “Do you draw a $100k salary?” “Did you just give $30B to the Bill and Melinda Gates Foundation?” “Have heads of State begged you to make verbal intervention because your wealth is the size of a second tier economy?” “What, precisely, do you have in common with Warren Buffett?”
These are perfectly sensible questions given that the risk tolerance of one person is rarely the risk tolerance of another. How many Americans have the exact retirement goals, financial means, and other suitability fingerprints of Warren the Oracle of Mutual of Omaha Buffett? GET YOUR HEADS ON PEOPLE!
Here are five reasons to eschew EVERY WORD Warren Buffett said here:
1. He bears no significant risk to a complete loss in his “personal” account. If he was 100% in treasuries, as he mentioned, he has already lost nearly 50% of his account. It is a psychological “sunk cost” and switching to U.S. equities from those debentures was more about propaganda than profit. Furthermore, what if his personal account is only a couple hundred thousand? It would be comparable to you and I taking our spare change and buying penny stocks (instead of leaving them in U.S. currency form).
2. He is 78 years old. Any of his actuarians would not give him the benefit of another 10 years on this earth, let alone the 20 that he estimates it may take for domestic stocks to recover. This is proof that he doesn’t need the money and doesn’t even care IF they recover. It also implies that he doesn’t care if you live to see the prediction come true or not - he’ll be dead. What will he care? Again, no consequences for his statements.
3. Buffett carefully omits that Berkshire Hathaway (BRK.A) holds several publicly traded foreign stocks: SNY (Paris, France), GSK (Middlesex, ENG, UK), IR (Hamilton, Bermuda), and according to his advertisement, the list is growing to include Israeli and Far-East Companies too. There is a huge difference between what a personal account, without a stated value, and the behemoth Berkshire Hathaway is buying. The first is insignificant, the second is expedient (hence, it is going global).
4. He’s a political puppet now. Notice how many meetings he’s had with the president and future presidents? Who else can politicians turn to? Greenspan “Mr. Midas Touch” got his head handed to him earlier this week over his fallible self-regulating model and short sighted risks. Bernanke is a joke. And no politicians are worth a shake until after elections. So who is the US pinch hitter? Buffett! Yeah, everyone knows he’s rich and actually makes money - let’s see if he’ll do some “verbal intervention” for the good old USA.
5. HE ISN’T YOU. Every investor has a risk tolerance, time horizon, saving potential, investing potential and personality that makes them special. From a suitability perspective, if the average CFP (Certified Financial Planner) told the New York Times that he was moving all of his senior citizen accounts out of bonds and into equities, he would be tried for malpractice due to improper suitability assessment.
Bottom line: it is all propaganda. Go back to your jobs (if you are lucky enough to have one) and ignore Warren Buffett and anyone else with lifestyles of the rich and the famous.
Disclosure: None
Related Articles
|
Find People on SA
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most activeSee all
Instabloggers.
Top Instabloggers » -
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 28 comments:
2. However, he said there was nothing worthy to buy at last bottom in 2002. His preformance has not been good since.
3. He is trying the new trick again, timing.
4. PE is now at 10, it was 7 in 1984 when we had only one inflation problem, now we have inflation, housing, banking, debt problems.
5. Our per captial inocme is ten times higher than China, but what we can do and Chinese can not do? If not much, the difference will be erased soon by global trade - as Paul Krugman said.
Look at his substantial investment in US Airways years ago as one example.
Buffet is trying to encourage the long term investment in good equities. Only problem, is that equities that are cheap now will probably be cheaper tomorrow.
2) Since he has been invested in US treasury bonds until recently, he has not lost 50% of his account as this post suggests. I am at a loss to understand why that is confusing for you. The stock market is down, treasury bonds are not.
3) Now that the stock market is trading at a much lower price, he is buying stocks. The first of these was wells Fargo, which he bought in the low $20 range. It is above $30 today.
4) He has not said it will take 20 years for the market to recover. His comment was "I don't know where the market will be 5 months from now. I think I know where it will be in 5 years."
5) You are wrong, Mr. Buffett is right. Time will prove this, as it always has. This is the fourth time he has given advice publicly. The first was to buy in 1974. The second was to buy in 1979. The third was to sell in 1999. The record speaks for itself, you can look it up.
Obviously better buy the general market now than at anytime over the last two years. Maybe it will be better to buy in another month-- what does seasonal time strategy say-- we are beyond 16 Oct-- so wait for the MACD cross.
I like your bravado for a thought provoking article.
One of the previous posters said Buffet had a terrible track record since 2001. Well he called the Chinese market correctly (following Buffet in and out of PTR made me a tidy sum), he called the Euro correctly (not following him in and out was a missed opportunity for me), people claiming having cash in 3 month treasuries cost him 50% should be discounted immediately, and he nailed it on derivatives (which is the BIG one).
Here's what he said in a letter to BRK shareholders:
"...Large amounts of risk, particularly credit risk, have become concentrated in the hands of relatively few derivatives dealers, who in addition trade extensively with one another. The troubles of one could quickly infect the others. On top of that, these dealers are owed huge amounts by nondealer counterparties. Some of these counterparties, as I've mentioned, are linked in ways that could cause them to contemporaneously run into a problem because of a single event (such as the implosion of the telecom industry or the precipitous decline in the value of merchant power projects). Linkage, when it suddenly surfaces, can trigger serious systemic problems."
Mind you, he said this in 2003, not a couple of months ago. He received countless grief for this, and was even accused of being a hypocrite because he had used derivatives to his advantage previously. Well he's still fabulously wealthy and for many who were also wealthy at the time, but didn't heed his warning, they are no longer wealthy.
If Buffet says now is the time to start investing in certain US equities, you might want to pay attention. His record speaks for itself. He didn't amase in is lifetime an amount of wealth comparable to a "second tier economy" because he's misguided, a BS artist, or just plain lucky, so I'd suggest you leave the Buffet bashing to the less informed.
If my portfolio drops by 50%, the required 100% climb just to reach break even will make for a long wait. I'm already down about 20% and I'm fairly confident that I'll lose more if I keep buying stocks. For the last year I've listened to the pollyanna's proclaim that stocks are "on sale". In short order, the stock that was on sale was an additional 20-50% down. And still, we wait for other shoes to drop, which they almost certainly will. Warren can do what Warren wants. He has so much money, it just doesn't matter to him. As for me, keeping what I have is priority one.
This is a poorly written article, and your use of grammar, and punctuation is simply atrocious. When you attended the University of Utah, did you ever take any basic English, or creative writing courses? I highly advise you to attend several classes before writing another article, and perhaps you can find a retired English teacher to be your tutor?
I'll venture that you're wrong about the problem being "Buffett isn't us" - it's the other way around. If people were like Buffett and had his patience and perspective, took smart risks, etc., their portfolios would be much better off.
2. Whether he was buying with his personal money or BRK is irrelevant, except that he said in the article that he was buying with his personal money. You got that fact wrong.
3. NO advice applies to everyone. Lambasting him for that is madness.
4. Calling him a "puppet" is nothing but a slur. But, even if he was, that does not change the validity of his arguments. Attack the argument, not the arguer.
5. Ignoring one of the most successful investors of all time is incredibly shortsided. Buffett may or may not have your investing style, so listen to somebody else, but the wealth of somebody does not impair their ability to give advice to YOU. Conversely, their well proven ability to make money should give you an indication to listen.
6. This is more to the posters - Buffett's record. Let's compare apples to apples. Buffett has gone on record about the market only a few times in his life. Back in the early 70s. At the top of the tech bubble. One or two others. And now. If you had listened to him, you would be enonormously wealthy right now. Retired. Rich.
Once again, his advice was that stocks were cheap, he doesn't know when this will end or if it is a bottom, but in the long term you will do very well if you buy now. If you are an investor with cash, you'll do well to buy. If you can't read between those lines and realize that you shouldn't be putting the baby's food money into the market, that your error, not Warrens. It's advice for investors trying to decide when to go back in the market, not advice to throw money you need in the next few years in the market.
I want to say his personal account is approx $150 million based on what he said years ago, but the $500 million number might be correct. So to the authors point it isn't $100,000. But this still doesn't neccessarily move the needle for Buffett. You have to understand the degree to which he cares about loss. His tolerance for loss is probably lower than any investor regardless of how rich he is.
Maybe the market goes down 10 or 30% within the next few weeks...but who cares! Unless of course you are everyone else. Look if your doctor or lawyer really cares about making money in the next two months then they should try insurance fraud or the lawyer should raise his hourly rates.
What people forget is that Warren Buffett caters to long-term investors of which there probably arn't many. (most people who claim they are long-term are just pretenders,they'll buy a stock saying I dont care what happens and then it drops 20% and then they rethink what they just said)
Buffett is a pure value guy. If someone you trust ask syou to give him $8 bucks today and he'll give you $2 dollars for the next 15 years, you are telling me you wouldn't do it? This is the situation now, you can find stocks that are that cheap.
If you disagree with Buffett then you shouldn't have recommened stocks at all in the past 5 years because relative to now they were not cheap enough. (of course I speak with the benefit of hindsight)
What Buffett buys in his PA will be totally different than what he buys or what Louie Simpson buys at BRK. You can bet that Warren Bee will be purchasing lower mkt cap stocks that will the move the needle in his PA. A stock with a market cap of $5 billion doesn't do jack in the BERK
He's gone on record about buying stocks like this only a few times in his life. If you had followed his advice, you would be rich. Filthy. Stinking. Rich. Retired. Hired help. Private jet. *That's* the record you should be looking at, not at what he did since 2001 or whatever. He doesn't try to make major bucks in those kinds of markets. It's *this* type of market, a once in a century event, where he loads up and becomes, well, the richest man on earth.
What an odd article and collection of comments.
See the Motley fool article by Bill Mann "Is Buffett talking up his own Book"
You like others, are just trying to get attention. BTW - Who are you? probably not a billionaire!
Also take a look at the S&P 500 graph from 1950 to present - now is the time to buy for long-term investors. In 10 years the fear and the low stock prices will be gone.
So who would you rather take investment advice from, Buffett or some clueless Seeking Alpha blogger???? Thanks, thought so.
..such an easy call....
then neither does 'the oracle' speak with unequivical sense, common
or otherwise.
All in all, it's good to see someone doing other than bowing
down to the imperious authority of success and, yes, excessive
wealth. The almighty dollar gets WAY to much by way of slavish
adulation, and that goes for the advice of the filthy wealthy as well.
FOUR stars, and a six pack to boot.....cheers to ya!!
Berkshire is a good investment for those of us who don't spend our days day trading.
There's a reason why Buffett does so well. He doesn't move with the herd. The herd follows him.
There's a much simpler theory to espouse- he's being honest as always (including 1999 when he warned of a bubble), and you're likely part of the republican base, disappointed that he supports Obama's policies with a national interest in mind.