Buffett vs message board amateurs - the 5 year challenge

Discussion in 'Stocks' started by Cutten, Oct 17, 2008.

  1. I have noticed that since Buffett said he is going to be fully invested in stocks if they stay at these prices, a few people on here have criticized him for his move, saying he will go broke etc. I thought it would be appropriate to keep a record of this, for educational reasons, and bragging rights for the ET members if they turn out to be correct.

    I will note the S&P or ES globex price that is trading when the ET member posts up his disagreement with Buffett, and then start a paper trade for them short the S&P from that level, versus Buffett's long-term buy & hold. We can check back at regular intervals to see the progress, and then in 5 years will will see whether Buffett was right, or the ET posters were smarter. The total net gain & loss per contract and in percentage terms will be calculated. We can then form a fair judgement of the ET members involved, and Buffett himself.

    Current dissenters:

    "itcanbedone" - short ES from 920 vs Buffett long
    http://elitetrader.com/vb/showthread.php?threadid=141570

    "NY_HOOD" - short ES from 928 vs Buffett
    http://elitetrader.com/vb/showthread.php?threadid=141578


    Any more dissenters feel free to post here and I'll add you to the list.
     
  2. doesn't mean anything.
    People here are TRADERS
    Buffet is a long term INVESTOR

    comparing apples to oranges ?
     
  3. You might want to compare SPY rather than ES if you are going to keep track of it for a long period.
     

  4. Cutten, why would you use the ES as a model? You are simply giving a lot of credit to Buffet when credit is not deserved in this case. He is simply buying into certain companies in the S&P. Why don't you use the share price of HIS company?

    So lets say for the record you are long 113000 of BRK.A I personally have no idea where the market is going or if he is right. But I will certainly love to keep track of your progress.
     
  5. I agree with you Cutten, and appreciate the fact that you are taking this tact rather than the ususal ET Flame Fest approach.

    It would be great if you could get an exact listing of Buffet's current holdsing, as well as the percentages of his portfolio that he has allocated to the particular company/sector (you know, kind of like what was done with stock_tr3dr ... LOL, good 'ol stocky).

    Lacking that I think we should just use the cash index of the SPX rather than the SPY (too small) or the ES (way to much leverage).

    At market close yesterday the SPX Cash Index was at 946.43.


    Have a nice weekend. :)
     
  6. The people criticizing him are well aware he is a long-term investor. Thus they are criticizing his INVESTMENT decision.
     
  7. I'll use the SPX index level. The reason I quoted ES was because the S&P was closed during that post, whereas ES was trading on globex.
     
  8. His recommendation was for normal investors to buy stocks. He has widely known views that 99% of investors are best off using an index fund. Hence using the SPX as a proxy.

    I am comparing his recommendation (buy stocks) with the dissenters (don't buy stocks, or short them).
     
  9. Cutten is correct here.

    If they are criticizing Bufffett's actions, that means they probably think we still have further room to go to the downside, followed by a long term period of sideways, basing action (an economic scenario which would prove to be a total disaster to Buffet's holdings).

    They most definitely are making decisions as traders, not investors. And creating an index of their trades vs. his is not a bad idea at all (while you're at it, could you throw Cramer in the mix as well?). :D
     
  10. clacy

    clacy

    I agree. The average ET'er probably has a negative net worth, yet they're the quickest to criticize guys who typically make more in a day than most of these guys will make in their lives.

    Buffett might not always be right, but so far, he's been pretty darn close to perfect.
     
    #10     Oct 17, 2008