Betting On Warren Buffett
Do you know who Warren Buffett is? I was talking to a friend of mine recently and she didn’t know who he is. I guess it all depends on what you are interests are in life but it is still surprising that anyone wouldn’t be familiar with one of the richest self-made man in the world.
Buffett’s claim to fame is that he is one heck of a stock picker. He’s an octogenarian but he still has a very keen mind and he’s still making tons of money. What’s more surprising is that Warren Buffett stock picks are all done the old fashion way despite the age of stock picking programs and technical analysis. Buffett looks at financial statements and determines if a company has any intrinsic value and how it compares to its actual stock price. If he sees that it is a value stock pick, he jumps at the chance to add it to his portfolio.
It all sounds so simple doesn’t it, and yet so many people have problems executing this simple plan: buy low and sell high. The problem is that a lot of investors, whether they be new or seasoned, have shaky hands. They don’t have the patience to hold onto a stock when it is going through rough patches. As Buffett once said, time is the friend of the wonderful company, the enemy of the mediocre. Granted, people make mistakes in picking stocks but perhaps if people have the long term perspective, they will wait undervalued companies out and let the market catch up to a great company.
Another stabilizer of shaky hands is to take on the view of an actual owner of the company you are investing in – which you are in a small way. If you take on this perspective, perhaps you wouldn’t be so quick to dump the company. After all, would you buy and sell a brick and mortar business within a few days?
Despite the fast action of day traders, the world’s best investor is still doing things the old fashion way – his way. While the new generation of investors might not know who he is and be preoccupied by the latest trading system, I’d still put my money on Buffett.
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