How does Buffett do it?

Discussion in 'Trading' started by stockeroo, Jun 18, 2010.

  1. Considering that:

    1.) There has NEVER been a trader/speculator (not investor) that has made hundreds of millions of dollars CONSISTENTLY for 30+ years without blowing up God knows how many times (in any market).

    AND

    2.) Virtually all the best investment firms/funds stocked with the brightests minds in the world (analysts, economists, mathematicians, traders, investors) in the LONG RUN (30+ years) fail to beat the market average by a margin about equal to their operating expenses

    THEN

    How does Buffett and literally no more than 5-10 others in the ENTIRE WORLD and history of investing manage to beat these odds and make hundreds of millions consistently over decades and beat the market average time and time again?

    If you invested $60K with Buffet 30+ years ago, you'd have over $80 million right now. WTH???
     
  2. Baron

    Baron ET Founder

    Mainly because investment professionals buy stocks, but Buffet buys businesses. Big difference.
     
  3. That's only 27%/year.

    Any trader worth his salt should be making that much PER WEEK!
     
  4. So you are saying any trader should be able to turn $60k into $80m in a week.

    You must be smoking something that doesn't come in a Marlboro box?
     
  5. Buffett used his cash machine (Insurance Cos) to bet big on Coke/McDonalds/etc.

    Big advantage most of us will never have.
     

  6. ............ :confused:
     
  7. loza

    loza Guest

    This question shows why ETers (the DAYTRADERS) are mainly wondering aimlessly in the dark, and struggle.
    Investors can be consistent IF they avoid leverage and
    buy value for the long term. This does not mean Buffett or other investors do not use some sort of market timing. Clearly, Buffett loves buying when blood is running on Wall Street and everybody is afraid. As someone already said he NOW buys (and controls) companies, but if you look into this a little more, you would clearly see that when he was in his early years he just invested in value a very good time (after WWII, in the 50's, 60's)
    He would only blow up if and when stocks would have no value, a clear fiscal and societal Armageddon that hopefully we never see...
    Contrary traders act stupidly, on leverage and take big risks every day, probably multiple times, because they are not well funded and wish to make their living at the casino. This obviously can work for sometime, but usually eventually shit hits the fan and even the best and smartest blow up.

     
  8. Most intelligent, well-adjusted people are not stupid enough to go on working once they make 20 mill or so, whereas Buffett, Soros & co are. Thus, the population of billionaires is a tiny fraction of the population of talented performers, only the truly insane will become that rich, everyone else will spend their limited remaining time on earth doing more interesting things.
     
  9. Give me a name of a single trader/speculator (not investor) that has done this for 30+ years (added points if they use technical analysis).
     
  10. Soros made a lot more than 27% per annum. A lot of his decisions were based on price action i.e. "technical analysis".

    Soros is far superior in market talent to Buffett, period.

    Also don't forget that Buffett took huge risks for example he lost 40-50% in 1973-74 and recently. He also benefited from the US at no point having a political upheaval during his investing career.
     
    #10     Jun 18, 2010