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Furthermore he’s making the point that you cannot tell in advance which managers, if any, will outperform the market over a given period. Buffet himself has a
by bryananderson 6y ago
Furthermore he’s making the point that you cannot tell in advance which managers, if any, will outperform the market over a given period.
Buffet himself has a couple factors that help him outperform which you and I likely don’t. For one thing, he often buys private companies (not a liquid market with constant price discovery like the public stock market). That’s not uncommon, even if it’s out of reach of most retail investors. More unattainable for the rest of us, he has the “Buffett Halo” effect: stocks often go up just because he bought them! This effect also induces companies to give him a discount on equity, because the existing shareholders benefit from the halo. Obviously Buffett must still work hard to choose stocks wisely, or the halo would evaporate over time.
- Gustomaximus 6y ago2 points; the “Buffett Halo” effect I dont think is fair to include. This is very real but its also temporary. Consider stuff like his failed Tesco investment. Long term we get back to fundamentals. The big advantage I think worth mentioning is Buffet also buys control much of the time he invests. You and I buy shares to go along for the ride. He buys in on value + they ability to control direction + typically do share buybacks that further increases the per-share value and uses the companies own money to grow value further. This is a real game changer beyond the traditional value approach you and I will never have.