Warren Buffett’s annual letter came out last week and like most years, investors came running to see what the Oracle of Omaha had to say. I however was not among that crowd. I respect Buffett for all he has accomplished and the impressive track record he has been able to obtain. Warren Buffett is and will always be considered one of the greatest investors of our time but I have very little interest investing like the Oracle.
Barry Ritholtz recently penned an article for Bloomberg citing why you should not try and emulate Warren Buffett. In that vein, here are my five reasons why I simply don’t have an interest in following the path of Buffett.
1. I don’t buy companies, I buy stocks. When it comes to placing a trade I am not taking large stakes, much less majority ownership, in various companies. I buy stocks and there’s a big difference. My performance is shown through the movement of that stock’s price and my end game has been, and will always be, a sell order, not a structured buyout or spinoff.
2. Because I don’t buy companies I don’t have access or influence to the boards of the stock’s I own. My methodology for investing and trading does not center around getting seats at the C-suite table to gain control of the direction of a company.
3. My holding period does not involve decades. One of Warren Buffett’s famous quotes is, “our favorite holding period is forever.” While his holding period is actually much shorter than ‘forever,’ Warren has the luxury to not be downtrodden by drawdown. My main priority is risk management and doing my best to minimize exposure to declines.
4. I am price focused and have a lesser concern for balance sheet formation. As long as my account is reconciled in the latest price a stock has traded for that is what I will pay attention to in managing positions and creating a trading discipline. I’ve seen more stocks than I could count with broken economics, massive debt, or showed no profit shoot for the stars as the irrational investors bid the price of shares higher.
5. Finally, drinking that much Coke just isn’t good for you.
Thanks for reading.
The information contained in this article should not be construed as investment advice, research, or an offer to buy or sell securities. Everything written here is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned.
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Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
