Seriously, Warren Buffett Is a Better Investor Than You
By Tim Hanson and Brian
Richards
...See, in helping privately held Mars buy Wrigley last year,
Buffett made a deal with zero liquidity in sight. That's precisely the opposite
of virtually all investors in private companies (particularly venture
capitalists), who demand a clear path to liquidity from the start.
But not Buffett The Oracle of Omaha has long preached that the long term is the
only view for an investment -- even if the investor is beyond retirement age.
He's said before that his ideal holding period is "forever" -- and the
Mars-Wrigley-Berkshire (NYSE: BRK-B) deal is yet another example of Buffett
putting that theory into practice.
Mr. Buffet's long-term strategies are admirable and should be followed by investors from all socioeconomic backgrounds.
...Yet most investors have not learned this lesson. Recent NYSE data showed
that the average holding period for a stock is now less than one year....
One year? Wow! That's just ridiculous. It's one thing to have a sum of money that is strictly set aside to "play" the market and not worry about losing, but for the average holding period to be less than a year is surprising.
The article goes on to talk about common misconceptions people might have about Warren Buffet. For example:
We got emails telling us that Buffett has tons of advantages over the
common man, ranging from his enormous war chest of cash to his access to
executives and/or privileged information...
....Buffett's enormous cash position is actually an enormous disadvantage
when it comes to earning superior stock market returns. It essentially prevents
him from investing in anything other than liquid large caps...
...According to Capital IQ, while there are more than 28,000 companies
trading on the world's exchanges, there are just 1,566 currently capitalized at
$3 billion or greater. That means Buffett's cash position effectively locks him
out of 95% of all public companies.
Basically, Warren Buffet does NOT have an advantage because of his vast wealth, instead he has a disadvantage. He has often said that if he only had $1 million to invest he could easily see annual returns of up to 50%.
We should all take a lesson from Warren Buffet's patient yet persistent investing strategies. The man is one of the richest men in the world, and he has been building his wealth in the market since the age of 11.
Here are some final tips to help you follow Mr. Buffet's investing style:
So while he may be a better investor than us today, we can at least learn
from his experiences and -- like he did -- become superior investors over
time.That means:
1. Buying for life (or, at least, the long term).
2. Buying
small (perhaps our lone advantage).
3. Buying based on thorough research and
due diligence.
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