5 ms·

and yet he himself is an example of exactly the opposite mentality. He has been an outlier manager for decades and would have been a great choice of manager for

and yet he himself is an example of exactly the opposite mentality. He has been an outlier manager for decades and would have been a great choice of manager for anyone he would take money from. He effectively takes new money whenever his holdings pay dividends and reinvests it successfully. Roughly speaking he's returned 100% (vs 50% for the Sp500) in 10yrs giving about a 7.2% return rate. He consistently beats the market and then claims that "managers" cannot.

redschell 13y ago
Buffett is an interesting character. From this article, it would appear that he sees himself as some kind of entrepreneur/investor/manager hybrid than as a pure money manager. http://dealbook.nytimes.com/2012/12/03/for-buffett-the-long-run-still-trumps-the-quick-return/ http://dealbook.nytimes.com/2012/12/03/for-buffett-the-long-... If you go on to read anything about activist investors, like Carl Icahn, you get the feeling that the only way to beat the market is to tamper with it.
marcosdumay 13y ago
Yep, but he does not invest on a fund.
MarkMc 13y ago
Not quite - I think his point was that money managers with very large sums to invest cannot beat the market. He made that claim almost 40 years ago, and more recently his own record clearly contradicts it. So perhaps he no longer holds such a view... Edit: It looks like Buffett had changed his view by 1984 [1]: "Size is the anchor of performance. There is no question about it. It doesn't mean you can't do better than average when you get larger, but the margin shrinks." [1] http://www.tilsonfunds.com/superinvestors.html http://www.tilsonfunds.com/superinvestors.html
- e12e 13y ago
  Or, perhaps the stock market doesn't reflect value, and insider trading (in one form or another) is the norm, not the exception?
- foobarian 13y ago
  It's simple math. A money manager controlling 100% of the market by definition can't beat the average ;) So the potential for good performance must increase along that spectrum.
lutusp 13y ago
> He consistently beats the market and then claims that "managers" cannot. But he isn't beating the market -- he's beating the pants off his followers, people who dutifully buy the same stocks he does. It's the announcement effect -- Buffett buys a given stock, Buffett is a winner, so everyone responds by buying the same stock: self-fulfilling prophecy. The irony is that the timing of the groupie-purchases assures that money flows from them into Buffett's accounts, because the followers buy too late to benefit. Another effect is that, if Buffett buys stock in a particular company, he is betting that company will grow. Potential customers notice this, prospective employees notice this, the public notices this: it's another self-fulfilling prophecy. Is this a mere hypothesis? Yes, it is. Can it be proven? Only in principle, not in fact. Is Buffett actually a genius? Chances are no one will ever know, and it's certainly not science.
- deleted 13y ago
  [deleted]
- ellyagg 13y ago
  The insult here--"groupie-purchases"--suggests you understand Buffett's existence is a serious blow to your case. As you implicitly acknowledge with your hypothesis of the "announcement effect", the null hypothesis is that Buffett beat the market. It's time you hold yourself to the same standard you demand elsewhere in this thread and prove that "groupies" from 40 years ago maintaining their positions all these years account for Buffett's long term rate of return.
  - lutusp 13y ago
    > The insult here--"groupie-purchases"--suggests you understand Buffett's existence is a serious blow to your case. Nonsense. The announcement effect is a well-established distortion of the market: http://www.investopedia.com/terms/a/announcment-effect.asp http://www.investopedia.com/terms/a/announcment-effect.asp > ... to your case. My case? The fact that investment managers cannot produce results has been proven over and over again. It's not my case, it is a simple fact about reality. All you need to do is review the WSJ Dartboard Contest. http://www.investorhome.com/darts.htm http://www.investorhome.com/darts.htm In the Dartboard Contest, managers had every incentive to prove what they could do -- a success would have made them simultaneously rich and famous. They failed. Any questions? > As you implicitly acknowledge with your hypothesis of the "announcement effect" ... "My hypothesis?" You need to learn something about equities. The announcement effect is very well-known. http://www.economicshelp.org/dictionary/a/announcement-effect.html http://www.economicshelp.org/dictionary/a/announcement-effec... Do you suppose I wrote all these articles, and talked a bunch of economists into believing in it? For God's sake. > ... the null hypothesis is that Buffett beat the market. The null hypothesis is that Buffett did not beat the market based on special skills. The null hypothesis is that Buffett's performance has a pedestrian explanation -- chance. That's what the null hypothesis means. http://en.wikipedia.org/wiki/Null_hypothesis http://en.wikipedia.org/wiki/Null_hypothesis Quote: "In statistical inference of observed data of a scientific experiment, the null hypothesis refers to a general or default position: that there is no relationship between two measured phenomena, or that a potential medical treatment has no effect." I can't repair the defects in your education in a series of forum posts -- you will just have to go out and get an education on your own, like a grown-up.

redschell 13y ago

Buffett is an interesting character. From this article, it would appear that he sees himself as some kind of entrepreneur/investor/manager hybrid than as a pure money manager. http://dealbook.nytimes.com/2012/12/03/for-buffett-the-long-run-still-trumps-the-quick-return/ http://dealbook.nytimes.com/2012/12/03/for-buffett-the-long-... If you go on to read anything about activist investors, like Carl Icahn, you get the feeling that the only way to beat the market is to tamper with it.

marcosdumay 13y ago

Yep, but he does not invest on a fund.

MarkMc 13y ago

Not quite - I think his point was that money managers with very large sums to invest cannot beat the market. He made that claim almost 40 years ago, and more recently his own record clearly contradicts it. So perhaps he no longer holds such a view... Edit: It looks like Buffett had changed his view by 1984 [1]: "Size is the anchor of performance. There is no question about it. It doesn't mean you can't do better than average when you get larger, but the margin shrinks." [1] http://www.tilsonfunds.com/superinvestors.html http://www.tilsonfunds.com/superinvestors.html

e12e 13y ago
Or, perhaps the stock market doesn't reflect value, and insider trading (in one form or another) is the norm, not the exception?
foobarian 13y ago
It's simple math. A money manager controlling 100% of the market by definition can't beat the average ;) So the potential for good performance must increase along that spectrum.

lutusp 13y ago

> He consistently beats the market and then claims that "managers" cannot. But he isn't beating the market -- he's beating the pants off his followers, people who dutifully buy the same stocks he does. It's the announcement effect -- Buffett buys a given stock, Buffett is a winner, so everyone responds by buying the same stock: self-fulfilling prophecy. The irony is that the timing of the groupie-purchases assures that money flows from them into Buffett's accounts, because the followers buy too late to benefit. Another effect is that, if Buffett buys stock in a particular company, he is betting that company will grow. Potential customers notice this, prospective employees notice this, the public notices this: it's another self-fulfilling prophecy. Is this a mere hypothesis? Yes, it is. Can it be proven? Only in principle, not in fact. Is Buffett actually a genius? Chances are no one will ever know, and it's certainly not science.

deleted 13y ago
[deleted]
ellyagg 13y ago
The insult here--"groupie-purchases"--suggests you understand Buffett's existence is a serious blow to your case. As you implicitly acknowledge with your hypothesis of the "announcement effect", the null hypothesis is that Buffett beat the market. It's time you hold yourself to the same standard you demand elsewhere in this thread and prove that "groupies" from 40 years ago maintaining their positions all these years account for Buffett's long term rate of return.
- lutusp 13y ago
  > The insult here--"groupie-purchases"--suggests you understand Buffett's existence is a serious blow to your case. Nonsense. The announcement effect is a well-established distortion of the market: http://www.investopedia.com/terms/a/announcment-effect.asp http://www.investopedia.com/terms/a/announcment-effect.asp > ... to your case. My case? The fact that investment managers cannot produce results has been proven over and over again. It's not my case, it is a simple fact about reality. All you need to do is review the WSJ Dartboard Contest. http://www.investorhome.com/darts.htm http://www.investorhome.com/darts.htm In the Dartboard Contest, managers had every incentive to prove what they could do -- a success would have made them simultaneously rich and famous. They failed. Any questions? > As you implicitly acknowledge with your hypothesis of the "announcement effect" ... "My hypothesis?" You need to learn something about equities. The announcement effect is very well-known. http://www.economicshelp.org/dictionary/a/announcement-effect.html http://www.economicshelp.org/dictionary/a/announcement-effec... Do you suppose I wrote all these articles, and talked a bunch of economists into believing in it? For God's sake. > ... the null hypothesis is that Buffett beat the market. The null hypothesis is that Buffett did not beat the market based on special skills. The null hypothesis is that Buffett's performance has a pedestrian explanation -- chance. That's what the null hypothesis means. http://en.wikipedia.org/wiki/Null_hypothesis http://en.wikipedia.org/wiki/Null_hypothesis Quote: "In statistical inference of observed data of a scientific experiment, the null hypothesis refers to a general or default position: that there is no relationship between two measured phenomena, or that a potential medical treatment has no effect." I can't repair the defects in your education in a series of forum posts -- you will just have to go out and get an education on your own, like a grown-up.