Warren Buffett Isn't You. Don't Listen to Him.

October 28, 2008

Warren Buffett Isn't You. Don't Listen to Him, Don't Trust Him, He is Wrong.Posted by Karen DeCoster at October 28, 2008 08:15 PM

My article from last week, Warren Buffett, Government Propagandist, drew more emails than anything I can recall in recent times. There were 200+ favorable, and only three that disagreed with me. Some web surfing this morning revealed some others who joined the fray. This article, 5 Reasons to Ignore Buffett, is eerily parallel to my piece (sometimes point-for-point), and declares Warren a "verbal interventionist." Then, here's a piece by C.S. Jefferson that states:
The difference for the average investor is that while it’s common for legendary traders of Wall Street to mock how the sheep get sheared by buying at the top and selling at the bottom, they neglect to remember that most people sell not because they want to, but because they have to make bill payments and pay for basic necessities such as food and shelter. Sound advice by professional money managers falls on deaf ears when the margin of error means being able to feed your family or not.

Warren Buffett can buy with impunity, unlike the rest of us with limited resources. Because he is rich enough that whatever decision is made to invest, he can, literally, afford to be wrong until the markets turn around and agree with him at some point or another.

In the National Post, Diane Francis writes Buffett is Wrong: Avoid Stocks and Buffett is Wrong: Avoid Stocks, Part II. In the Sunday Times, Jennifer Hill writes Capital Hill: Buffett is wrong: the market madness is still far from over.

http://www.lewrockwell.com/blog/lewrw/archives/023716.html

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"Dear Warren Buffett"

Knoxville blogger 500Jerk has penned an open letter to HIs Greatness:

Dear Warren:

I appreciate your advice in the NYT last week, you know, where you advise being greedy when others are fearful and fearful when others are greedy. That's very helpful. And its good advice, to the extent being greedy is praiseworthy at all. But I get your drift, I truly do: buy now, because American companies are on sale. And believe me, I would like to take advantage of the deep, deep discounts currently available in the stock market, because like you, I believe these investments will result in fabulous profits years from now.

Here's the thing, though, Warren, and I know you don't have this particular problem, but maybe you can mull it over on one of those cold Nebraska nights: Like most Americans, I DON"T HAVE ANY MONEY LEFT TO INVEST IN THE STOCK MARKET. While you may have millions rolling around in your pockets, I invested my spare change. Now I've watched it devalue 25%. So although I'd like to be courageous (I like that word better, don't you?), I can't actually afford to do that. For now, I'll have to hang back and hope the stock market rebounds in fairly short order so I can recover what I've lost.

Thanks for the words of encouragement, though. Maybe I can use them in the next recession. And good luck to you shopping for bargains.

Sincerely yours,

500Jerk

http://blogs.knoxnews.com/knx/granju/2008/10/dear-warren-buffett.html

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Comment: I have blogged on this here.

In making decisions under conditions of uncertainty, the consequences must dominate the probabilities. We never know the future.

The intelligent investor must focus not just on getting the analysis right. You must also ensure against loss if your analysis turns out to be wrong - as even the best analyses will be at least some of the time.

The probability of making at least one mistake at some point in your investing lifetime is virtually 100%, and those odds are entirely out of your control. However, you do have control over the consequences of being wrong.

http://myinvestingnotes.blogspot.com/2008/10/consequences-must-dominate.html