# Speculation mistaken for Reasoned Analysis



## bob99 (29 June 2011)

I have watched over the years as many believe the words of those who they think “know” what is going on in the markets, yet in all reasoned analysis they have no more a clue than you or I.

Take for example Warren Buffett. A dottering old man who lives in the same house as he was born in, lives – according to the marketing machine called ‘Buffett” a very humble life, nothing has changed for him other than being worth 10’s of billions. So, what’s the appeal? It’s like Miss Marple, she seemed harmless and so those around her took her into their confidence. Buffett seems the same to me, he speaks and everyone listen’s. Yet to what? Over the past 12 months (and longer) he has been talking up the US economy, yet we all know it’s a basket case ready to topple over. If it wasn’t for the fact that the $US is woven into so many daily facets of the world economy it would have been dumped and treated with the same distain as Greece is currently feeling long ago. Yet Buffett speaks and markets move. Where is the declaration of self interest in all this? Where is the reasoned analysis to suggest he is right and all others are wrong? If Buffett says all is well and markets go up the self-serving interest is meet by the price, and hence value of his company rises.

Analysis has been done and Buffett is right when the market is moving up and he is wrong when the market moves down. He has underperformed the market over the past 20 yrs (since 1993), however the loss seems less because he doesn’t take big risk’s, hence the value doesn’t decline as it would as if he was ‘really’ out there making money.

Steve Jobs is another. Apple have a product – a pretty ordinary one in all respects, however the technology and the future applications are brilliant, yet when he speaks so few seem to ask the important questions. He says the future is bright and the Apple share price goes up and all is well for the future: it’s bright. The same use to be said Micro-soft yet those heady days are long behind us. Google is another.

This is not to say those mentioned and others don’t have the right to speak out and express their views, by all means please do so. Yet when you have the ‘cult’ following of a Buffett then those who listen should be asking more questions of him, not less. Some of you may argue that Buffett et al. is no different from a politician talking up an economy etc. yet they have significantly more scrutiny thrown at them. Look at Sawn, appalling as he is as Treasurer, he can’t mention a single $ value without headlines the next day proclaiming brilliance, or more so in his case farcical ineptness. 

Just because someone says it’s so doesn’t mean it is. When will real critical analysis be sort, and in fact demanded when those who people apparently respect actually wake p and say … “Ohhh, could you provide some evidence for your statement?”


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## FxTrader (29 June 2011)

bob99 said:


> Just because someone says it’s so doesn’t mean it is. When will real critical analysis be sort, and in fact demanded when those who people apparently respect actually wake up and say … “Ohhh, could you provide some evidence for your statement?”




Buffett has an excellent track record applying the value investing principles he learned from Ben Graham and others to selecting quality businesses to purchase.  He is intelligent but not a genius and has been primarily U.S. centric in his investment focus.  The U.S. financial media idolize him (CNBC for instance) as an investment guru with the track record to prove it.  That's ok to a point but I must say I find him to be unimpressive as a public speaker.

Problem is that the media prod Buffett to comment on areas outside of his expertise such as macro economics - he's not, never has been or ever will be qualified to comment on macro economics.  He's essentially a business analyst/investor who buys entire businesses that fit his criteria with some (like Sees Candy) being terrific long term performers.  His U.S. centric focus though has not been visionary in light of the rise of Asia and the drastic decline in the U.S. economy.

As for his frugal lifestyle even though a billionaire, I tend to agree that it's just a little strange to make one's lifelong focus the acquisition of companies and wealth while enjoying so little of the lifestyle that such wealth can provide.  The money is clearly secondary and competing in the arena of capitalism is what really motivates him.  Giving away his entire fortune to the Gates Foundation is evidence of this casual attitude toward money and acquired wealth.


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## Gringotts Bank (29 June 2011)

I think I know what you're saying here bob.

This is the way I see it:  people in positions of power and authority have a responsibility to encourage optimism and positivity.  After all it's a good thing.  As an individual, if I have a positive mindset, then my 'natural' inclination when reading charts will be to gravitate (often unconsciously) towards stocks that will make me money.  So all Buffet/Jobs and co. are saying 'try to be positive', because they knows it works as a general rule.

As a trader, I have to balance this against the fact that I cannot control other people.... and herein lies a problem - _*those same 'other people' make up the market,*_ and they decide what happens to the stock I just bought.  All I can do is control myself.  

So Buffett looks at the economy and knows it's up the creek, but he also knows that the only way to get ahead is to be reasonably positive as an individual.  The reality doesn't necessarily have to dictate your mindset.  

If my stock is getting sold off hard, a positive mindset will say *sell*.  Selling a stock that is obviously about to get smashed is a positive move.  I complain about bots and insto manipulation a bit in here.  A truly positive mindset will acknowledge the manipulation, point it out, and either move with the fund or steer clear.  Sometimes I can do this, other times I get caught.

Buffett might be better saying: "Things are stuffed in our economy, but for me personally, I know how to stay positive, and that's how I've been so successful.  What you do for yourself won't bother me too much because I know what I'm doing!"


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## Gringotts Bank (29 June 2011)

Just to add this - 

IMO, a good mindset or belief structure would be along the lines of "I can see opportunities clearly, so I know when to buy and when to sell.  When I'm not feeling optimistic, I stay out of the market.  I can make good money trading/investing this way".  Then you work accordingly.

IMO, a dangerous belief structure would be along the lines of "I believe in this company and it will make me rich; all I have to do is believe", because what that does it place a filter on reality, meaning that you will ignore bad news or negative chart patterns.  The first approach also filters reality but does so in a much safer way.  It's also easier to apply in that it's flexible and it puts the emphasis back on you.


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## mazzatelli (29 June 2011)

Gringotts Bank said:


> IMO, a good mindset or belief structure would be along the lines of "I can see opportunities clearly, so I know when to buy and when to sell.  When I'm not feeling optimistic, I stay out of the market.  I can make good money trading/investing this way".  Then you work accordingly.




I've never seen that sort of training on any trading desk.


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## Gringotts Bank (29 June 2011)

Everyone has a set of beliefs about the market and their ability to profit from it, whether they talk about it or not.  And this is the very reason why 100 traders of equal intelligence and training will achieve vastly different results trading exactly the same system.


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## Wysiwyg (29 June 2011)

Optimism, pessimism or supposed realism. Take your pick.


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## ENP (29 June 2011)

bob99 said:


> “Ohhh, could you provide some evidence for your statement?”
> 
> He has underperformed the market over the past 20 yrs (since 1993)




Do you have any info regarding this. Links, websites, etc. 

Thanks.


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## Tysonboss1 (29 June 2011)

bob99 said:


> 1, Take for example Warren Buffett. A dottering old man who lives in the same house as he was born in,
> 
> 2, Yet to what? Over the past 12 months (and longer) he has been talking up the US economy, yet we all know it’s a basket case ready to topple over.
> 
> ...




From reading your post I am confident that you do not know enough about Buffett or hes investment principles to pass judgement.

1, He does not still live in the house he was born in.

2, He has constantly said he has no idea where the economy will go short term, But he is extremely bullish long term, He doesn't make investments hoping for short term capital growth instead he buys businesses with the belief that over time through all vissitudes the will contiune to tick along, earning profits.

3, No, the market generally scoffs at him and says he entered to early, Not that he cares. If he gets a chance to by a good business at a discount he will do it regardless of what the media say will happen in the short run.

4, Buffett has always made statements that he does not judge himself on the market value of berkshire hathaway, but rather by it's book value and earnings per share.

5, Buffett is neither right or wrong because the market moves up or down, He is right or wrong depending on the earnings his investments generate over the years.

6, The Book Value of berkshire hathaway has never underperformed the market when measured over a rolling 5 year basis. Warren Has stated that if he ever underperforms the market over a rolling 5 year period he will start paying dividends and begin a wind down of the company.

7, Yes they should, But the nay says should also look a bit more deeply into why he genuinely believes the things he says.


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## ROE (29 June 2011)

ENP said:


> Do you have any info regarding this. Links, websites, etc.
> 
> Thanks.




BRKA vs SP500 

http://imageshack.us/photo/my-images/684/brka.jpg/

Look like he outperform it by a large margin


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## Tysonboss1 (29 June 2011)

Here is an interesting document if you want to learn more about buffetts core beliefs,

The Berkshire hathaways owners manual.

In June 1996, Berkshire’s Chairman, Warren E. Buffett, issued a booklet entitled “An Owner’s Manual*” to Berkshire’s Class A and Class B shareholders. The purpose of the manual was to explain Berkshire’s broad economic principles of operation. An updated version is reproduced on this and the following pages.
OWNER-RELATED BUSINESS PRINCIPLES
At the time of the Blue Chip merger in 1983, I set down 13 owner-related business principles that I thought would help new shareholders understand our managerial approach. As is appropriate for “principles,” all 13 remain alive and well today, and they are stated here in italics.
1. Although our form is corporate, our attitude is partnership. Charlie Munger and I think of our shareholders as owner-partners, and of ourselves as managing partners. (Because of the size of our shareholdings we are also, for better or worse, controlling partners.) We do not view the company itself as the ultimate owner of our business assets but instead view the company as a conduit through which our shareholders own the assets.
Charlie and I hope that you do not think of yourself as merely owning a piece of paper whose price wiggles around daily and that is a candidate for sale when some economic or political event makes you nervous. We hope you instead visualize yourself as a part owner of a business that you expect to stay with indefinitely, much as you might if you owned a farm or apartment house in partnership with members of your family. For our part, we do not view Berkshire shareholders as faceless members of an ever-shifting crowd, but rather as co-venturers who have entrusted their funds to us for what may well turn out to be the remainder of their lives.
The evidence suggests that most Berkshire shareholders have indeed embraced this long-term partnership concept. The annual percentage turnover in Berkshire’s shares is a fraction of that occurring in the stocks of other major American corporations, even when the shares I own are excluded from the calculation.
In effect, our shareholders behave in respect to their Berkshire stock much as Berkshire itself behaves in respect to companies in which it has an investment. As owners of, say, Coca-Cola or American Express shares, we think of Berkshire as being a non-managing partner in two extraordinary businesses, in which we measure our success by the long-term progress of the companies rather than by the month-to-month movements of their stocks. In fact, we would not care in the least if several years went by in which there was no trading, or quotation of prices, in the stocks of those companies. If we have good long-term expectations, short-term price changes are meaningless for us except to the extent they offer us an opportunity to increase our ownership at an attractive price.
2. In line with Berkshire’s owner-orientation, most of our directors have a major portion of their net worth invested in the company. We eat our own cooking.
Charlie’s family has 80% or more of its net worth in Berkshire shares; I have more than 98%. In addition, many of my relatives – my sisters and cousins, for example – keep a huge portion of their net worth in Berkshire stock.
Charlie and I feel totally comfortable with this eggs-in-one-basket situation because Berkshire itself owns a wide variety of truly extraordinary businesses. Indeed, we believe that Berkshire is close to being unique in the quality and diversity of the businesses in which it owns either a controlling interest or a minority interest of significance.
Charlie and I cannot promise you results. But we can guarantee that your financial fortunes will move in lockstep with ours for whatever period of time you elect to be our partner. We have no interest in large salaries or options or other means of gaining an “edge” over you. We want to make money only when our partners do and in exactly the same proportion. Moreover, when I do something dumb, I want you to be able to derive some solace from the fact that my financial suffering is proportional to yours.
3. Our long-term economic goal (subject to some qualifications mentioned later) is to maximize Berkshire’s average annual rate of gain in intrinsic business value on a per-share basis. We do not measure the economic significance or performance of Berkshire by its size; we measure by per-share progress. We are certain that the rate of per-share progress will diminish in the future – a greatly enlarged capital base will see to that. But we will be disappointed if our rate does not exceed that of the average large American corporation.
4. Our preference would be to reach our goal by directly owning a diversified group of businesses that generate cash and consistently earn above-average returns on capital. Our second choice is to own parts of similar businesses, attained primarily through purchases of marketable common stocks by our insurance subsidiaries. The price and availability of businesses and the need for insurance capital determine any given year’s capital allocation.

In recent years we have made a number of acquisitions. Though there will be dry years, we expect to make many more in the decades to come, and our hope is that they will be large. If these purchases approach the quality of those we have made in the past, Berkshire will be well served.
The challenge for us is to generate ideas as rapidly as we generate cash. In this respect, a depressed stock market is likely to present us with significant advantages. For one thing, it tends to reduce the prices at which entire companies become available for purchase. 


Entire doc here
http://www.berkshirehathaway.com/ownman.pdf


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## Tysonboss1 (29 June 2011)

Buffet has no reason to "talk up" the market. He and all investors profit more greatly over long periods by markets going down.

Here is a vid where buffet explains this theory in 3mins

.


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## FxTrader (29 June 2011)

ROE said:


> BRKA vs SP500
> 
> http://imageshack.us/photo/my-images/684/brka.jpg/
> 
> Look like he outperform it by a large margin




Entry date, price and holding time period are everything for the purpose of such a comparison.  BRKA is at the same price level now as it was 3 years ago at around $113,000.  That's no capital gain or dividend in 3 years, some investment!  

The S&P 500 index is up 100% since June09 while BRKA is up just over 50% over the same period.

If you had invested in BRKA in Sept 1998 and held until Feb2009 you would have had no capital gain or dividend income over a period of 10.5 years!  In fact, since 1998 BRKA is up a modest 40% (+$33,000 on an initial investment of $80k) to date, 13 years.

Let's assume that you would have achieved an average of 5% annually (very conservative estimate) in bank interest on that $80k investment over 13 years.  Your profit would then have been +$73k in interest.  That's a whopping $40,000 more than the same investment in BRKA over the same period.  So just how wonderful is your investment with Warren Buffett and Co (value investor extrordinaire) over more than a decade, half what you would have earned in bank interest.

So much for buying and holding BRKA for the last 13 years!  Anyone still think that Buffett is generating extraordinary returns from his extraordinary businesses?  Still think that investing $113,000 for one share of BRKA is a good investment?  Think again.


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## Julia (29 June 2011)

Tysonboss1 said:


> 2, He has constantly said he has no idea where the economy will go short term, But he is extremely bullish long term,



Whacko!!!   We can all be 'extremely bullish long term' when we're not required to nominate the length of that term.  What does "long term" constitute?

Thanks to FX for outlining some reality here.

I'm curious about why Mr Buffet inspires the sort of non-objective devotion amongst his disciples that he does.


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## So_Cynical (29 June 2011)

Julia said:


> I'm curious about why Mr Buffet inspires the sort of non-objective devotion amongst his disciples that he does.




Warren has some Fanbois that's for sure.  its a fact that "value" investing gets popular after big market declines...when "value" is easier to find.


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## ROE (29 June 2011)

FxTrader said:


> Entry date, price and holding time period are everything for the purpose of such a comparison.  BRKA is at the same price level now as it was 3 years ago at around $113,000.  That's no capital gain or dividend in 3 years, some investment!
> 
> The S&P 500 index is up 100% since June09 while BRKA is up just over 50% over the same period.
> 
> ...




Easy to pick and chose in hind-insight if you think you can annually compounding 20% average a year on your portfolio you can be a very very rich man due to the law of compounding.

Many people talk a lot with their pretty graphs and wording not many can match the long term performance 

also remember making 20% return on 10B is a lot harder than making 20% on 1 million.

have a look at Warren record way back when he has less money and unknown...30%-40% return annually isn't unusually for him.


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## ROE (29 June 2011)

Julia said:


> I'm curious about why Mr Buffet inspires the sort of non-objective devotion amongst his disciples that he does.




Everyone wired differently... Investing is like Fashion style.
you pick the one that suite you and you either stay with it
or you change style each year.

You not going to get thousand of people from all walk of life 
settle for one investment style.

It will be like that property thread  and on it goes for eternity

same stuff surface every few months, getting pretty boring after a while 
TA vs FA v EMT vs Warren vs etc.


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## FxTrader (29 June 2011)

ROE said:


> Easy to pick and chose in hind-insight if you think you can annually compounding 20% average a year on your portfolio you can be a very very rich man due to the law of compounding.




I selected the performance of BRKA for the last 13 years which is much longer than the investment horizon of the majority of investors, even those with a buy and hold bias.  Showing the performance of BRKA over 20 or 40 years is simply not as relevant to an investor who must fork out $113,000 for one share of BRKA today.  Your reference to the "law of compounding" is of no comfort to investors in Buffett's BRKA for the last 13 years.



> Many people talk a lot with their pretty graphs and wording not many can match the long term performance




Ah, you also have chosen to use the vague, nebulous and over used phrase "long term performance" without a context.  Long term for me is 5+ years, but means something different to each individual.  13 years of significantly underperforming bank interest is poor "long term performance" in my view and I suspect many would agree with me.



> also remember making 20% return on 10B is a lot harder than making 20% on 1 million. ...have a look at Warren record way back when he has less money and unknown...30%-40% return annually isn't unusually for him.




As an investor, if I note that it's much harder for a company to sustain high returns on a larger equity base then this is simply an indicator for what *not* to invest in.  Bottom line for me is, what forward returns can I expect from an investment today.  But you are only reinforcing my previous point, BRKA has been a lousy investment for the last 13 years and likely to continue to be so for years to come.  Buffett's performance 30 years ago is less relevant to an investor today than the performance of his company over the last decade.


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## Tysonboss1 (29 June 2011)

I think if we are discussing Warren buffetts ability as an investor and calling into question how valid his opinions are we need to look at the actual performance of the investments he is making inside berkshire rather than berkshires stock price.

Here is a comparison of Berkshires earnings compared to the sp500.


.........................Change in..............S&P 500............. Difference
.........................per share..............Including.............each year
........................book value ...........Dividends


1998 . . . . . . .      48.3 ................    28.6 ...................    19.7
1999 . . . . . . .      0.5.......................21.0  .................... (20.5)
2000 . . . . .          6.5.......................(9.1) ......................15.6
2001 . . . . . .       (6.2)....................(11.9).......................5.7
2002 . . . . . .       10.0.....................(22.1)......................32.1
2003 . . . . . .       21.0 ....................28.7.......................(7.7)
2004 . . . . . .       10.5 .....................10.9......................(0.4)
2005 . . . . . .        6.4 ...................... 4.9.......................1.5
2006 . . . . . .        18.4.....................15.8....................... 2.6
2007 . . . . . .        11.0..................... 5.5....................... 5.5
2008 . . . . . .        (9.6)...................(37.0)......................27.4
2009 . . . . .          19.8.....................26.5 ......................(6.7)
2010 . . . . .           13.0....................15.1.......................(2.1)

Compounded Annual Gain – 1965-2010 . .  berkshire 20.2% pa........... ps500  9.4% pa     
Overall Gain – 1964-2010 . . . . . .  Berkishire     490,409%......... sp500   6,262%


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## Tyler Durden (30 June 2011)

There will always be a degree of speculation in the share market. Nothing is certain. And it is difficult to apply reasoned analysis because I don't think humans, and therefore the market, is too rational.

I remember having a discussion with a friend. I said "company x just announced an expected decrease in profits, so their SP should go down". The next day I saw the SP go up, and my friend said people must've been thinking the SP was under-valued and the profits would increase back to the 'norm' in due course.

 Beats me.


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## FxTrader (30 June 2011)

Tysonboss1 said:


> I think if we are discussing Warren buffetts ability as an investor and calling into question how valid his opinions are we need to look at the actual performance of the investments he is making inside berkshire rather than berkshires stock price.
> 
> Here is a comparison of Berkshires earnings compared to the sp500.
> 
> ...




As we all know, past performance is no guarantee of future performance or returns.  Quoting changes in the book value or the performance of BRKA over the last 45 years is just more obfuscation from yet another Buffett devotee.  As I said before, recent share price and business performance (13yrs in the case of BRKA) is more significant to potential and current investors than its performance 20,30 or 40 years ago.

Berkshire is a mature, long standing business and the market has had plenty of time to "weigh" the value and price of BRKA and bring them into alignment.  BRKAs share price performance for the last 13 years is woeful and quoting changes in book value or BRKAs share price 20-40 years ago is of cold comfort to BRKA's investors over the last decade.

There can be no disguising or whitewashing BRKAs poor share price performance over the last 13 years (+40%), the stats are there for everyone to see.  In contrast, had you invested in say BHP over the last 13 years what would your return have been... 900%!  BRKA is a dog by comparison over this more relevant time period.  Investing your money with Buffett has been a bad idea for more than a decade, plain and simple.


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## bob99 (30 June 2011)

The disappointing aspect of opening up this discussion is that the Buffett junkies have jumped in to save his lack of credibility. Christ, I am surprised I haven’t been bash over the head yet for describing Apple products as inferior, however I think that is still coming.

Want some interesting facts on Buffett? Pick up a copy or find the article by John M Green in the Fin Review on 21 July. There’s a great start at someone dissecting the last few yrs of the 'god like status' that has been given to him.

Honestly, I don’t care if Buffett claims no responsibility by saying he doesn’t profess to know all the answers, the fact is he has little care, and takes no responsibility for his comments.

As for the optimism approach, I like it, yet no disrespect just because I pray to win the lotto doesn’t mean I will, it’s all chance. Hence a win is not based on being positive, or my pray, or a theory, or a pattern, or a "system", its chance, optimism might give you the extra boast not to become disillusioned and hence you will cough up the $10 next week, yet when the odd's are against you no matter how much optimism you have, it will not ... matter.

What my org. post was all about was the personal responsibility that people must take. Sure, the individual must take responsibility, however for the avg. investor who has very little invested, has even less of a clue as to how everything works, then they rely on the voice of others who are deemed to be respected. However with that respect (earned) there should be some responsibility. I'm sorry so many of you respect this man so much you can’t see past his self-serving tactic's.

He has shareholders, and should he come out tomorrow and denounce the US then what will happen to his stock, and the market in general? So while the optimism might be nice, the truth is often better. Otherwise how can anything every be fixed?

The same is for many who are seen as being respected. Someone closer to home is Alan Kohler and his Eureka Report, I have never read more self-serving, factually incorrect and bias tripe in my life, however so many people follow the word.

As said previously, an avg, investor doesn’t have the money, skills, or resources to investigate the market on a daily basis, and hence rely on these sorts of 'expects' and thus - and to their own detriment - admonish their responsibility to 'respected' commentators and what they have said.

This is the point, no matter how much Buffett et al. proclaim to be ord. people with a view then it would take an incredibly arrogant person to also say my words mean little when it’s quite obviously untrue. Take the farce of the "lunch" with Buffett. I don’t care about the money going to charity, why not just give it anyway? Hell, Buffett could give 1000 times what was paid and still have 5 or 6 or 7 times that left. So the charity part is just a con to make some feel better.

CNBC should be strung up for the pedestal they put him on - they seem to be a great cause of his 'god like status', yet it’s hard to find any critical analysis of his commentary, which is at the heart of my posting. Just because Jobs says Apple has a new device and its great doesn’t make it so, yet it’s become an lexicon in our society now where the 'cool' crowd are actually in and anyone else is not "in". Say something bad about Apple, or Jobs, or its devices or its Micro-soft style “take-over” of the world approach and you will be lucky to escape with your life.

If you stifle debate and argument (whether reasoned or not) then you lose sight of the bigger picture. You cannot have a level playing field if the field is constantly being manipulated by those who have the means.

I don’t expect much from the 'press' yet a little less regurgitation of "statements" as fact and a little more "reporting" would be preferable.

I am sure the Buffett groupie set will have something to say, yet the discussion is not how great you think he is, or how humble he is, it is about responsibility for your actions - esp. when those actions have a wider influence.


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## FxTrader (30 June 2011)

bob99 said:


> Want some interesting facts on Buffett? Pick up a copy or find the article by John M Green in the Fin Review on 21 July. There’s a great start at someone dissecting the last few yrs of the 'god like status' that has been given to him.




Here's a link to the same article I think you're referring to...

http://www.theaustralian.com.au/business/opinion/warren-buffets-time-in-the-sun-may-have-passed/story-e6frg9if-1226078818619

This article just reinforces what I have said previously in this post, investing with Buffett has been a bad idea for over a decade.  Green sums it up this way...

"_So on a variety of criteria, his performance this century suggests we can stop giving each of his words and actions a god-like reverence and start to treat him as a highly respected, yet still mere mortal. Yes, it does seem that the times have changed._"

Exactly!


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## waimate01 (30 June 2011)

I share a healthy skepticism for people who claim to have some inside running on all the answers.

Whenever I see someone spruiking the secret formula to success, I always ask myself, "if you *really* knew the answers, how come you're not fabulously wealthy?".

I'm looking at you, Alan. And you Roger. Marcus, don't smirk.

Equally, I take note that they make money by selling the formula to their secret sauce, not by actually using it.

There's some obvious differences between Buffet and these wannabes.

He's also a significantly more successful investor than I am, and for that I am reluctant to chuck rocks.


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## Tysonboss1 (30 June 2011)

FxTrader said:


> As I said before, recent share price and business performance (13yrs in the case of BRKA) is more significant to potential and current investors than its performance 20,30 or 40 years ago.
> 
> Berkshire is a mature, long standing business and the market has had plenty of time to "weigh" the value and price of BRKA and bring them into alignment.  BRKAs share price performance for the last 13 years is woeful and quoting changes in book value or BRKAs share price 20-40 years ago is of cold comfort to BRKA's investors over the last decade.




I do not own Berkshire stock, So Berkshires share price means nothing to me, But offcourse I am interested in some of the core principles that have been part of berkshire and allowed it to grow it's net worth over time.

Yes, I aggree that past performance is no indicator of future performance, and that just because a "safe and sound value approach" has worked in the past does not mean it will work in the future, But there is also no reason to think that it won't.

As I have already stated, the reason I quoted the change in book value is because that is tha acutal return that berkshire is earning on the funds they hold, which has prooved to be a very sound result, even through the the gfc.

This prooves that what he is doing is working, and his advice has some merit.

But I am not trying to sell anyone berkshire shares, nor am I suggesting investing in berkshire is a sure way to riches, just that the underlying principles of berkshire are sound.


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## Tysonboss1 (30 June 2011)

bob99 said:


> . Take the farce of the "lunch" with Buffett. I don’t care about the money going to charity, why not just give it anyway? Hell, Buffett could give 1000 times what was paid and still have 5 or 6 or 7 times that left. So the charity part is just a con to make some feel better.




Buffett has already signed his fortune away to charity,


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## Tysonboss1 (30 June 2011)

Bob99,

You seem to be very passionate in your opinions on Warren Buffet, Is there anything in particular he has done or said that makes you feel this way.

If you don't mind can you bring up a few examples of the things he has done or said and then give some rational dispassionate arguements as to why you think he is wrong.


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## FxTrader (30 June 2011)

Tysonboss1 said:


> Yes, I aggree that past performance is no indicator of future performance, and that just because a "safe and sound value approach" has worked in the past does not mean it will work in the future, But there is also no reason to think that it won't.




A clever use of phrase meant to spruik Buffett's brand of value investing as "safe and sound", let me add though not safer than bank interest which his company has underperformed against for the last 13 years and counting.

Has Buffett's value investing approach worked well for investors in his company?  For the last 13 years no, prior to that yes.  Investors invest in a company to make money, not because they admire the soundness of its fundamentals for years with little or no ROI to show for it.



> As I have already stated, the reason I quoted the change in book value is because that is tha acutal return that berkshire is earning on the funds they hold, which has prooved to be a very sound result, even through the the gfc.




Whatever the ROE over the last decade, the end result for his investors has been dismal and definitely not a "sound result".



> This prooves that what he is doing is working, and his advice has some merit.
> But I am not trying to sell anyone berkshire shares, nor am I suggesting investing in berkshire is a sure way to riches, just that the underlying principles of berkshire are sound.




Again it matters little to the investor if the "underlying principles are sound" but the company can't produce a result for investors half as good as bank interest for 13 years.


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## Tysonboss1 (30 June 2011)

bob99 said:


> As said previously, an avg, investor doesn’t have the money, skills, or resources to investigate the market on a daily basis, and hence rely on these sorts of 'expects' and thus - and to their own detriment - admonish their responsibility to 'respected' commentators and what they have said.




Here is the advice warren gives to the average investor, Pretty much the same advice here has been giving to the average investor for the last 50years and ben graham gave the same advice before him.

.


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## Tysonboss1 (30 June 2011)

FxTrader said:


> A clever use of phrase meant to spruik Buffett's brand of value investing as "safe and sound", let me add though not safer than bank interest which his company has underperformed against for the last 13 years and counting.
> 
> Has Buffett's value investing approach worked well for investors in his company?  For the last 13 years no, prior to that yes.  Investors invest in a company to make money, not because they admire the soundness of its fundamentals for years with little or no ROI to show for it.
> 
> ...




Again this discussion is not about the performance of berkshire share price or berkshire share holders. It is about the soundness of warren comments and advice.

As I have already said I don't own berkshire shares, nor would I ever own berkshire shares.


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## Tysonboss1 (30 June 2011)

FxTrader said:


> let me add though not safer than bank interest which his company has underperformed against for the last 13 years and counting.
> 
> .




Again let me state that warren has greatly outperformed bank interest and the SP500based on the returns he has generated. So he is good at allcating capital and obviously has alot of skill and knowledge. So his opinions do carry weight

So even though the share price of berkshire may not have out performed in the short term, it does not mean his principles are not valid and that we can not use some of the lessons in our own portfolios.

Also, as you rightly mentioned past results do not determine future results, and that fact that Berkshires share price has underperformed in recent times, may point to the fact that significant capital gains may flow in coming years from a correction.


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## bob99 (30 June 2011)

Firstly, I would like to apologise that this discussion seems to have lost its direction, as many discussions seem to.

I will also state I havent bothered reading all your comments Tyson as there is no point. Your position is very well understood, nor do I have any desire to enter into more discussion about a non event other than to say the following:

I don’t care about your god-like faith in Buffett, nor do I care what figures you claim to support your god-like faith you have in him.

So please, start a discussion on how great Buffett is, just hit the Start Topic button. E-mail Becky Quick and set-up a fan club and be done with it. Maybe call it “Swooner’s Anon”

Why must the zealots be so offended when their faith barer is tainted by another.

Let me spell this out in a way that anyone over the age of 5 can understand, and equally with an IQ of greater than the said age.

THIS IS NOT ABOUT BUFFETT OR YOUR LOVE FOR HIM. ITS NOT ABOUT BUFFETT, ITS NOT ABOUT HIM!

Is that clear enough? Christ I hope so.

This is about Buffett et al. (do you know what that means?) Good. Who spruik their beliefs as being fact and have consequences that are significantly more far reaching than the average person's and in turn can shape/affect the course of markets/stocks with a single word - NO MATTER how many fact’s to the contrary there are. See my point?

Why have you not stood up for Alan Kohler? Do you agree that the nonsense of his "report" is just that, self-serving nonsense? Do you agree with the comments about Steve Jobs? Do you agree with all the comments about others who have a position and a market to protect? Read into that their ego and more so their wealth is greatly associated with the “public” following they have.

Just take the blinkers off - albeit very hard - to forget about Buffett and concentrate on the text and the meaning, not the offence you seem to have conjured up.

Ohhh, and no I don’t have a personal belief one way or the other about Buffett, nor has he harmed me. He is a very good example, that’s all, an example. And, and apt one at that.


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## FxTrader (30 June 2011)

Tysonboss1 said:


> Again this discussion is not about the performance of berkshire share price or berkshire share holders. It is about the soundness of warren comments and advice.




Well not really, that may be where want to steer the discussion but it seems more about the God like reverence the media and some like yourself have for Buffett (and other media favorites like him) and his advice, performance and comments and whether such reverence and worship is currently warranted or justified (certainly not over the last decade as pointed out in the Green article.) 

Frankly though, since you are a tireless evangelist for Buffett and value investing, frequently posting vids on him or value investing in the forums (as you have done in this thread as well) I did not expect any objectivity from you on this subject. No doubt you would like to use this thread to yet again give everyone here a dissertation on value investing Buffett style but that is not the subject at hand.




> Again let me state that warren has greatly outperformed bank interest and the SP500based on the returns he has generated.




Not in the last 13 years for investors in his company.



> So he is good at allcating capital and obviously has alot of skill and knowledge. So his opinions do carry weight.
> 
> So even though the share price of berkshire may not have out performed in the short term, it does not mean his principles are not valid and that we can not use some of the lessons in our own portfolios.




I have never implied that Buffett's "principles are not valid and that we can not use some of the lessons in our own portfolios."  I have simply provided (as does Green) evidence that the oracle of Omaha has not been producing results for his investors over more than a decade and hence does not currently deserve the continued star status and reverence he gets from the media for his investment performance for his shareholders.

Buffett makes mistakes and to his credit has acknowledged some of them but his biggest mistake to date has been the U.S. centric focus of his investment activity that has delivered such poor returns for his investors over the last decade.  I think we shall see that investing in the U.S. economy has and will continue to be an underperforming proposition for investors including Buffett.


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## Tysonboss1 (30 June 2011)

bob99 said:


> 1, I don’t care about your god-like faith in Buffett, nor do I care what figures you claim to support your god-like faith you have in him.
> 
> 2, ITS NOT ABOUT BUFFETT, ITS NOT ABOUT HIM!
> 
> ...




1, I don't have god like faith in him, I only made comments and showed figures directly related to things said by you and fxtrader.

2, I am sorry, but you mentioned Buffett directly in your opening comment on this thread.

3, I have no idea who Alan Kohler is, and have never read his report, So have made no comment on him

4, I know very little about steve jobs, I do own an iphone though:

5, there will always be market commentaters both bull and bear who get it wrong, you specifically singled out buffet, My comments were just trying to point out that out of all the commentators of varying experiance, Buffett is probably the most qualified to give judgement and he often gives the most conservative advice, No need to hose him. 

In the coming years you may well find out all the hard core Bears who told people to load up on Gold and guns have probably given the most injurious advice.

6, then why mention him at all.


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## mazzatelli (30 June 2011)

C'mon Tyson - we all know you have a massive man crush on "The Buff" :


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## Tysonboss1 (30 June 2011)

FxTrader said:


> I have simply provided (as does Green) evidence that the oracle of Omaha has not been producing results for his investors over more than a decade and hence does not currently deserve the continued star status and reverence he gets from the media for his investment performance for his shareholders.




I know thats what you are saying, You keep repeating yourself and forcing me to repeat myself. (which after this post I will not do). 

Yes the share price of Berkshire hathaway has not outperformed the market in general over the recent years, However the Performance of Berkshires investments Has. 

All that means is that the market has not priced in the value buffett had generated in the recent passed, or perhaps it was over valued at the begining of the 13 year period mentioned.

But as I previously stated if you are judging Warrens ability you need to measure his actual investment returns not his companies share price.


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## freddy2 (30 June 2011)

The ignorance displayed in this thread is truly astounding.



FxTrader said:


> Buffett has an excellent track record applying the value investing principles he learned from Ben Graham and others to selecting quality businesses to purchase.




Buffett has done far more than just investing in "undervalued companies" including such things as:
-merger arbitrage
-corporation action arbitrage
-warrent and convertible hedging
-writing options
-on the run/off the run bond arbitrage
-currency speculation (eg bet against USD)
-metals speculation (eg silver)



> He is intelligent but not a genius and has been primarily U.S. centric in his investment focus.




I don't know what you consider a "genius" but given what Edward Thorp (IMO a genius himself) wrote about meeting Buffett I suggest that you are wrong  (see Articles 21 and 22 http://edwardothorp.com/id9.html). And if you don't know who Edward Thorp is you are even more ignorant about investing than I thought.



> Problem is that the media prod Buffett to comment on areas outside of his expertise such as macro economics - he's not, never has been or ever will be qualified to comment on macro economics.  He's essentially a business analyst/investor who buys entire businesses that fit his criteria with some (like Sees Candy) being terrific long term performers.  His U.S. centric focus though has not been visionary in light of the rise of Asia and the drastic decline in the U.S. economy.




Again wrong, read some of the early 2000's annual letters where he explains why he was betting against the US dollar on which he made billions.



> If you had invested in BRKA in Sept 1998 and held until Feb2009 you would have had no capital gain or dividend income over a period of 10.5 years! In fact, since 1998 BRKA is up a modest 40% (+$33,000 on an initial investment of $80k) to date, 13 years.
> 
> Let's assume that you would have achieved an average of 5% annually (very conservative estimate) in bank interest on that $80k investment over 13 years. Your profit would then have been +$73k in interest. That's a whopping $40,000 more than the same investment in BRKA over the same period. So just how wonderful is your investment with Warren Buffett and Co (value investor extrordinaire) over more than a decade, half what you would have earned in bank interest.




In addition to the fact you cherry-picked the 1998 high, you ignore the fact tax is paid on interest while unrealised capital gains are untaxed.

Also, the article you linked to in The Australian also is highly statistically flawed. For example the writer compares BRK performance over the last 8 years against today's ASX top 40 instead of the ASX top 40 as it was 8 year's ago. Did he stop to consider that the ASX top 40 stocks today would by definition be among the top performing stock (ie a biased sample)? It seems you and the author are unaware of the dangers of performing post hoc analysis.


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## ENP (30 June 2011)

Tysonboss1 said:


> you need to measure his actual investment returns not his companies share price




Exactly. 

The investment returns the *business* itself makes can be dramatically different from what the *share price* is doing. The returns the *business* makes are facts that *cannot be changed*. The *share price* is people's general opinions on what the stock is worth and *changes constantly*.


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## AlterEgo (30 June 2011)

ENP said:


> Exactly.
> 
> The investment returns the *business* itself makes can be dramatically different from what the *share price* is doing. The returns the *business* makes are facts that *cannot be changed*. The *share price* is people's general opinions on what the stock is worth and *changes constantly*.




Amazing! 

So if the share price were going down the toilet, that wouldn't matter, as long as the book value were going up? Silly me thought that we were in the market to make money, not to admire how great the balance sheet looks. If the increase in book value doesn't move the share price up, then what's the point of it? You can't spend the book value in your retirement. Ultimately the share price is what matters, as that's the price you'll get for it when you sell it.


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## FxTrader (30 June 2011)

freddy2 said:


> Buffett has done far more than just investing in "undervalued companies" including such things as:
> -merger arbitrage
> -corporation action arbitrage
> -warrent and convertible hedging
> ...




I did not use the term "undervalued companies" I said quality businesses.  This is what he is best known for and what other contemporaries like Roger Montgomery focus on, business analysis and selecting quality businesses to invest in.  I know full well he invests in other instruments but that's not how he has distinguished himself or how Berkshire built its businsess empire.  Your point here is a therefore a useless one.




> Again wrong, read some of the early 2000's annual letters where he explains why he was betting against the US dollar on which he made billions.




Buffett's derivative exposures and hedging have not done much for the share price of his company over the last 13 years have they.  He's not an economist nor does he profess to be one and has always been primarily U.S. focussed in his investment activity with a few exceptions.   These are simply facts, no debate about this is necessary or useful.



> In addition to the fact you cherry-picked the 1998 high, you ignore the fact tax is paid on interest while unrealised capital gains are untaxed.




LOL, what a joke.  No cherry picking just quoting statistical facts that you and the other Buffett worshipers here find inconvenient.  BRKA has underperformed bank interest over the last 13 years, simply a fact.  Silly comments intended to cloud the issue about the tax implications of earned interest do not support your argument here.



> Also, the article you linked to in The Australian also is highly statistically flawed. For example the writer compares BRK performance over the last 8 years against today's ASX top 40 instead of the ASX top 40 as it was 8 year's ago. Did he stop to consider that the ASX top 40 stocks today would by definition be among the top performing stock (ie a biased sample)? It seems you and the author are unaware of the dangers of performing post hoc analysis




Still more nonsense and waffle from a blinkered Buffett fanatic.  BRKA has significantly underperformed a large basket of ASX listed stocks over the last 8-10 years but the CEOs of these companies are not an object of your worship, do the research yourself.  The only bias evident here is your slavish devotion to everything Buffett.


Bob, my apologies for indulging the biases, twisted logic and fanaticism of the Buffett worshipers here, it's time to stop.  They have hijacked this thread as they tend to do when their idol is mentioned in any thread.  I get what you've been trying to say here even though its been suffocated by Buffett's religious legion now.


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## FxTrader (30 June 2011)

AlterEgo said:


> Amazing!
> 
> So if the share price were going down the toilet, that wouldn't matter, as long as the book value were going up? Silly me thought that we were in the market to make money, not to admire how great the balance sheet looks. If the increase in book value doesn't move the share price up, then what's the point of it? You can't spend the book value in your retirement. Ultimately the share price is what matters, as that's the price you'll get for it when you sell it.




Spot on AlterEgo.  Rising book values and great looking balance sheets are fine but if they don't put money in your pocket as an investor it's time to put your money elsewhere.


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## freddy2 (30 June 2011)

FxTrader said:


> I did not use the term "undervalued companies" I said quality businesses.  This is what he is best known for and what other contemporaries like Roger Montgomery focus on, business analysis and selecting quality businesses to invest in.  I know full well he invests in other instruments but that's not how he has distinguished himself or how Berkshire built its businsess empire.  Your point here is a therefore a useless one.




Use whatever term you want, it doesn't change the fact Buffett has made a lot of money with other strategies than buying "quality businesses". That this is not widely known, or more likely you didn't know, doesn't change the fact Buffett has used multiple startegies to build his "business empire".



> Buffett's derivative exposures and hedging have not done much for the share price of his company over the last 13 years have they.  He's not an economist nor does he profess to be one and has always been primarily U.S. focussed in his investment activity with a few exceptions.   These are simply facts, no debate about this is necessary or useful.





Of course there is cherry picking, you looked at the data first than pick a period like 13 years. Why not 10, 11, 12 or 14 or 15 years. 13 years has clearly been cherry picked. I doubt you even know what "cherry picked" means. 30% tax rate 5% interest $80000 compunded over 13 years earns ~$45K not $73K, so clearly tax has a huge impact. That you had to arbitrarily choose a 13 year period and ignore the effects of taxation either shows your intellectual dishonesty or ignorance about investing.



> Still more nonsense and waffle from a blinkered Buffett fanatic.  BRKA has significantly underperformed a large basket of ASX listed stocks over the last 8-10 years but the CEOs of these companies are not an object of your worship, do the research yourself.  The only bias evident here is your slavish devotion to everything Buffett.




I suggest you learn what the "post hoc fallacy" is. Given your screen name I'm not suprised a noise trader such as yourself doesn't know what this means.


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## Julia (30 June 2011)

FxTrader said:


> Bob, my apologies for indulging the biases, twisted logic and fanaticism of the Buffett worshipers here, it's time to stop.  They have hijacked this thread as they tend to do when their idol is mentioned in any thread.  I get what you've been trying to say here even though its been suffocated by Buffett's religious legion now.



+1.  Thanks for raising such a valid topic, Bob.


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## InvisbleInvestor (1 July 2011)

freddy2 said:


> I doubt you even know what "cherry picked" means.




Yikes. It's getting hot in here.


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## bob99 (6 July 2011)

FxTrader said:


> Bob, my apologies for indulging the biases, twisted logic and fanaticism of the Buffett worshipers here, it's time to stop.  They have hijacked this thread as they tend to do when their idol is mentioned in any thread.  I get what you've been trying to say here even though its been suffocated by Buffett's religious legion now.




That’s OK, I can appreciate that right minded, and yes that is a go at those who have been arguing for the beatification of Buffett, people might want to try and get some facts across yet hey its why I haven’t indulged, it only raises the blood pressure and my wine collection is for that!



Julia said:


> +1.  Thanks for raising such a valid topic, Bob.




A pleasure!

So where does that leave us? How do we as investors and purveyors of the world at large combat the ever increasing BS and self-interest claims of Buffett (that’s my little dig) et al?

Would people pay me (and a group of others) a $300 yearly subscription to get a weekly or even a 3 times weekly newsletter that pointed out the FACTS and REAL situation of others claims? Or is this a losing battle? Will people only be interested in the 'facts' that are presented on the glossy pages of magazines and Fox TV or CNBC or Bloomberg, or as that reprehensible Alan K and his band of 'merry men' and the atrocious 'claims' they make on anything from Super to 'stocks to look out for'.

As I have always stated, people have to be responsible for their own actions, however when dealing with stocks or investments there is a world that even those who are 'experts' have trouble understanding how it all works, so how can the ordinary person begin to grapple with the complexity of it all, apart from relying on those who are seen as 'trusted' or 'respected' sources of information, no matter how self-serving their 'advice' or 'comments' are.

The sad part of any analysis is that if you have an interest then you are swayed by where that interest takes you, so long as you agree with it!

This is not to say that all who provide 'advice' or 'comment' are self-serving, yet generally there is an element of this no matter how in-offensive or indirect the comment.

How do you change this? How can a program of real evidence based analysis come to light and in fact at the fore of the many self-interest's out there? How do you get people to stop subscribing to the likes of AK etc and take a broader approach? I know it’s a losing battle, and one that can’t be won - unfortunately - yet if one person doesn’t renew, or turns CNBC off when Buffett talks (another small dig) then it might, in a thousand years or so have begun to snowball to where we can demand, and most of all expect and get real analysis without and overt and in your face lies and self-serving nonsense.

Ohhh, I would add before the legion of 3 jump on about their God like love for Buffett, I, or the group I would like to assemble be preaching a certain way or suggesting an alternative, I propose that the subscription would bring to you factually based analysis based on the publications of those self-serving and self-interested groups. So a review of others, a review of the BS! A Media Watch for the investment world.


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## Julia (6 July 2011)

> Ohhh, I would add before the legion of 3 jump on about their God like love for Buffett, I, or the group I would like to assemble be preaching a certain way or suggesting an alternative, I propose that the subscription would bring to you factually based analysis based on the publications of those self-serving and self-interested groups. So a review of others, a review of the BS! A Media Watch for the investment world.



Bob, while I'd regard it as a great idea, and would like to see it floated, I'm not sure that the great majority of 'investors' (translation:  people who are forced to have money in Super but who remain determinedly ignorant about what is happening with said Super), would provide a sufficient base for it to be worth your while.

Given the breathtaking passivity of the average Australian with funds in Super, i.e. at the time of the GFC most didn't even know what risk option they had selected for their Super, I'd imagine that most would look at any promotion for such a service and their eyes would glaze over, as probably already happens with the supa dupa advice proffered by the likes of AK et al.

I'd guess there would be clear interest from those who are already aware of the self-serving nature of so called mainstream advice, but would that be a sufficient market?

The other downside would be the undoubted retaliation by those presently sitting so comfortably in their current role who would obviously be threatened by criticism of their sage advice, no matter how subtly worded.

I'm not meaning to be negative.  I like the idea.  But objectively you might have difficulty.


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## skc (6 July 2011)

People are entitled to thier opinions, whether such opinions are self-motivated or not. 

While it is important to know the "facts", "facts" can be rubbery and must be "interpretated" before use. Take Buffet for example... is the statement "Buffet has underperformed the market" a statement of fact? Over what timeframe? On what measure? And how's that to be interpreted for the future? Does it mean he's due for a catch up, or is that a sign that he's getting old and stupid?

Some people are natural optimists (Buffet?) while others are bearish like hell (Faber?). Their opinion, either self-serving or not, are their own interpretation / spin of "facts". Like your thread title... is the person at fault the one who made those speculations, or those who mistaken them for reasoned analysis? If one has not the knowledge to decide whether such opinion is valid or not, then he/she should not be in the game imo.

Alan Kohler is a publicist first and foremost and he sells his reports. If people are happy to be misled by him by subscribing to his reports - they hardly have any grounds to complain??


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## ROE (7 July 2011)

bob99 said:


> As I have always stated, people have to be responsible for their own actions, however when dealing with stocks or investments there is a world that even those who are 'experts' have trouble understanding how it all works, so how can the ordinary person begin to grapple with the complexity of it all, apart from relying on those who are seen as 'trusted' or 'respected' sources of information, no matter how self-serving their 'advice' or 'comments' are.
> .




Buying good stocks and get reasonable return actually isn't science rocket
Anyone with average intelligent can do it .... you don't need any fancy foot work..
all I got is  a little calculator and a notepad for most of my investment decision

most of these business are in their face all they have to do is a little homework and buy at the right price

hell start from today and chart this for the next 10 years and see if it beat the market
SUL, DMP, RFG ,CCP, CCV, .... These business seem reasonable and even if you don't know what you doing buying these will probably make you happy return for years to come...

Most people just aren't willing to do the hard work and leave it to someone else ..

it is rare for someone to get good mark in the exam without studying

Why it is when it comes to their money they don't put in the effort and expect
excellent outcome?

I got people at work spend more time looking to buy a phone than
they do researching the business they buy 

"hard work pays off" be it in investing, studying or your job.

the more time you spent on something the greater the success, simple as that..


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## bob99 (8 July 2011)

Julia said:


> Bob, while I'd regard it as a great idea, and would like to see it floated, I'm not sure that the great majority of 'investors' (translation:  people who are forced to have money in Super but who remain determinedly ignorant about what is happening with said Super), would provide a sufficient base for it to be worth your while.
> 
> Given the breathtaking passivity of the average Australian with funds in Super, i.e. at the time of the GFC most didn't even know what risk option they had selected for their Super, I'd imagine that most would look at any promotion for such a service and their eyes would glaze over, as probably already happens with the supa dupa advice proffered by the likes of AK et al.
> 
> ...




I couldn’t agree more Julia. I am not advocating that I want to start such a concept, yet the idea appeals. However, it’s just the idea that such things are taken with such blind faith.

I think the first step is not to try and correct what the gurus have said, yet it’s too asked the questions that are so obviously needing to be asked, then work from there.

I subscribe to a bunch of investment newsletters and sites, and one such piece of utter BS was in Marcus Padley's newsletter yesterday. He highlighted what one broker has said:

"Long Term Outlook:

My tentative long-term count suggests that a bull market is due to commence sometime this decade."

Wow, only just over 9 years to get this right!

And people pay for this advice? I mean Christ! If I have started a Thread on ASF with this sort of thing I could only imagine the sorts of comments that would flood in, yet as this guy obviously works for a 'BIG' firm so it’s given 'air-play'.


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## bob99 (8 July 2011)

skc said:


> People are entitled to thier opinions, whether such opinions are self-motivated or not.
> 
> While it is important to know the "facts", "facts" can be rubbery and must be "interpretated" before use. Take Buffet for example... is the statement "Buffet has underperformed the market" a statement of fact? Over what timeframe? On what measure? And how's that to be interpreted for the future? Does it mean he's due for a catch up, or is that a sign that he's getting old and stupid?
> 
> ...




Ahhh, yet this is where you have missed the point. The sources of 'knowledge' for the average punter are in nearly all cases are predicated on the same initial source.

It’s like the food critic who recommends a restaurant, there is an inherent belief by most that he/she has an objective view, they may, yet the experience will always nearly be tainted if they are known - which they are.

Take for example a 'respected' food critic for Gourmet Traveller. All the chef's know him, the wait staff are trained to recognise them (him), and there are pictures of critics (him) in the kitchen, and many are 'good friends' with the chef. So reason says to me that staff will be more attentive, the kitchen (and esp. the head chef) will pay particular attention to his meal, and so the experience is muddied. He may be aware of this and takes this into account, yet how do we know?

So they write a review which - is typically - at odds with broader consensus.

It’s the same in the investment world, we don’t have the time, resources, nor funds to investigate all aspects so we rely on the critic or commentator or 'respected' person for insight.

Just as you don’t have the money to eat in all the restaurants in say, Sydney, you rely on advice on which ones are good. So the same is for investments.

The average person invests little and, I am sure would invest more if they could, so when a sizeable chunk of their funds would go to a broader level of analysis they may not have enough to buy those investments. Or, and possibly very importantly, it could be the same self-serving interest, of course depending on the topic.

It’s the availability of independent verifiable knowledge that is important. Just because AK might have many contributors its not to say they are all of a like mind - which sadly they are, a poor one (well not monetarily there not).

This is given more purchase when they are seen as the 'finance' reporter on TV. This once again is perception. I.e. AK reports finance for the ABC, he provides 'advice' and 'news reports' for papers etc. and has a newsletter which many 'names' I recognise so therefore he is a respected source. Not true, yet is seen as true.

Personal responsibility is important, yet in an industry where there is very few like it: the self-serving aspect and the representation of mis-information as FACT is a hard one for the average person to recognise and filter.

I would add there is a difference between 'optimism' and 'using your position to gain further for yourself' despite any evidence to the contrary.


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## Tysonboss1 (8 July 2011)

bob99 said:


> , so when a sizeable chunk of their funds would go to a broader level of analysis they may not have enough to buy those investments.
> 
> It’s the availability of independent verifiable knowledge that is important.




All the company Annual and half yearly reports are available free for download on the internet along with every other asx announcement.

The average guy on the street who does not have the time or inclination to conduct theireown research should not be trying to pick stocks or time the market any way.


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