Why Buffett May Not be Right for You

If you are an investor, an economist, or a politician, you know this person’s name.  Even if you are not in one of these categories, you may very well know the name Warren Buffett.  I remember when I first found myself interested in investing.  I had always believe that if you want to learn the art of something, you study and emulate the best in the business.


First, who is Warren Buffett?  Warren Buffett is the CEO Berkshire Hathaway.  I will spare you the entire history of this man but he is the picture of the American dream.  He and a friend purchased a pinball machine and placed it in a local business.  1 machine became 3 machines and from there the world’s most successful investor was in business.  Later, he and some investors discovered a textile manufacturer and started buying their stock for $7.60 per share.  That company was Berkshire Hathaway.


You can own shares of Berkshire as well but it will cost you.  As of the printing of this article, 1 share of Berkshire Hathaway will cost you $78,600.  That is down from $147,000.  Warren Buffett has become the icon of American and also international investing.


I decided to emulate what he was doing.  I got my hands on his portfolio and combed through his holdings.  Of course I couldn’t match his levels but if a stock was good enough for him, it was good enough for me, or so I thought.


I found out that my seemingly full proof plan was not quite as full proof as I thought.  I didn’t lose much money but I didn’t gain much in a year either.  These large cap, high quality stocks barely did anything.  Why was the Buffett Portfolio not a good idea for me?


The answer is valuable information to know for all beginning investors.  You can’t just look at Mr. Buffett’s portfolio.  You have to also look at his philosophy on investing.  Warren Buffett isn’t a trader.  He doesn’t buy and sell stocks in the hopes of making quick profits.  He doesn’t run a hedge fund and he isn’t a day trader.  Warren Buffett buys stocks with long term goals in mind.  He has said multiple times that he will hold a stock for as long as it takes to make a profit.  He also believes in patience.  His famous phrase, be greedy when others are fearful and fearful when others are greedy, speaks to the idea that he will wait as long as it takes for a good buy level.


If you are looking for long term investments, following Warren Buffett is a great idea.  If you’re looking for quick profits, you don’t want Buffett-style stocks.


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