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Actually Buffet is talking about investing in an index fund VS investing on the advice of an investment professional. He is referring to the same biases of prof

Actually Buffet is talking about investing in an index fund VS investing on the advice of an investment professional. He is referring to the same biases of professional investment advisers that the previous poster was referring to. Basically ordinary investors do have an asymmetric advantage over investment advisers and 'professionals'. Hence, it may not be your intention, but you are using Buffet's quote to make the exact opposite point of what Buffet himself originally intended. And he has often spoken on this subject. See also Mohnish Pabrai and his book 'The Dhandho Investor'.

tempestn 13y ago
Yes, I realize he is talking about index funds vs high cost mutual funds or paying an adviser for stock picks. And I agree that direct investing in stocks should be superior to high-cost mutual funds. (In fact, even if we did believe in the EMH, that would only mean the expectation is roughly the same as an index fund, just with a lot more volatility.) Still, the default advice of the supposed world's greatest stock picker is to stick with index funds. It's not, "Here are my rules of thumb for picking great stocks," or something along those lines. (I strongly suspect that Graham's advice would have been the same if index funds had been an option in his time.) That suggests to me that at the very least, he clearly believes that picking stocks is difficult. So sure, Warren Buffet, someone who you would expect to be highly biased toward stock picking, doesn't completely rule it out. But he doesn't endorse it in general either.
- slykat 13y ago
  I still think it's incredibly dangerous for anyone to follow "default advice". If you have had the luck of having investable savings (most of the world doesn't so consider yourself very lucky), please do yourself a favor and educate yourself on your financial goals and options.

tempestn 13y ago

Yes, I realize he is talking about index funds vs high cost mutual funds or paying an adviser for stock picks. And I agree that direct investing in stocks should be superior to high-cost mutual funds. (In fact, even if we did believe in the EMH, that would only mean the expectation is roughly the same as an index fund, just with a lot more volatility.) Still, the default advice of the supposed world's greatest stock picker is to stick with index funds. It's not, "Here are my rules of thumb for picking great stocks," or something along those lines. (I strongly suspect that Graham's advice would have been the same if index funds had been an option in his time.) That suggests to me that at the very least, he clearly believes that picking stocks is difficult. So sure, Warren Buffet, someone who you would expect to be highly biased toward stock picking, doesn't completely rule it out. But he doesn't endorse it in general either.

slykat 13y ago
I still think it's incredibly dangerous for anyone to follow "default advice". If you have had the luck of having investable savings (most of the world doesn't so consider yourself very lucky), please do yourself a favor and educate yourself on your financial goals and options.