Ok anyway, today's thought is. Do you think you are a better investor than Warren Buffett?
I struggle with this idea a lot. Cos it's very true. Just think about it.
I doubt any of us would dare say he/she is a better investor than Warren Buffett. The Oracle of Omaha.
For long term value investors/fund managers, he is probably one of the few famous and successful ones who has gotten rich through long term, repeated successful value investing. It's a long track record.
So the question is, IF Warren Buffett is better than me/you. Then why aren't you putting all your money in Berkshire Hathaway (BRK) shares?
We all admit he is better right? Then why don't we all put our money with him. And I mean ALL our money with him?
BRK is diversified, there are many underlying companies owned by BRK and they operate in multiple countries, but Warren Buffett does have a bias towards the US.
IF we try to do any form of asset allocation, buy bonds, currency, etc... This means that we think we can do better than the Oracle of Omaha. Let's leave short term trading out of the picture. Just for those of us who want to do long term passive/semi passive investments.
What are our usual concerns?
Diversification, volatility, concentration risk, currency risk, Warren Buffett may die one day.
BRK owns a diversified portfolio, has typically lower volatility than the market and has companies that operate in multiple countries. Warren Buffett has been alive for the past 20 years since I heard about him. BRK is a large holding company investing in bonds, equity and will do it's own currency rebalancing and risk management.
Now, I don't own any BRK shares, and never have. Maybe in future I may, but I keep thinking about this thought. Since I know that he is a better investor than me, then by default, all my money should be given to him to manage. Any other reason means I think I am better than him.
By taking almost everything into consideration, IF I try to do anything more, means I think I am better.
But why do I not just give him all my money then?
I think the reason is a perception of control, an idea that I have a choice.
It's my money, I want to do what I think is right, I don't mind getting lower returns. I can say that it's cos I want diversification but that's BS. Cos BRK is sufficiently diversified. It owns more companies than what's in the STI.
Side note :
If we want to allocate more to bonds cos BRK is too exposed to equity, then we should allocate money to PIMCO, which is one of the best bond asset managers in the world, set up the Bond King, Bill Gross, before he was ousted. So essentially, we should just buy BRK and PIMCO's bond fund and allocate a 70/30 or whatever equity/bond split we like.
Then maybe I think... MAYBE, just MAYBE Warren Buffett will screw up and my investments will do poorly. BUT WAIT! I can also screw up and there's a higher chance that I screw up than Warren Buffett will screw up... So that's a wrong idea as well...
I don't look at financial statements more than Warren Buffett's whole bunch of merry men. His team's task is to look for deals and make good value investments. I'm definitely not a better value investor as well.
So what's happening here? Why am I buying my own shares, bonds, deposits, whatever? Why am I doing any form of asset allocation of my own? Mr WB has more lobang in deals than any of us. More experience and basically, can invest better than any of us.
Simply put, if I/we try to manage our own investments, it simply means we think we are better than Mr WB and his band of merry men. Either that, or we are just irrational and make poor decisions cos we think that WE want control over our own investments.
As I said earlier. This is just an idea to put in your head. I'm not saying that BRK is the best company to invest in. That is your own choice.
Rather, it is an idea to think, if someone is better than you in something, then why are we not following him?
And everyone's answer will be different, and that's fine. But rather, I hope we can all come to an awareness, that maybe, we aren't very rational at all.
Cos I as I always say, awareness will set us free.
Lying to ourselves is just sad and pointless cos who are we trying to fool?
Hope this tickled your brain today.
<<PREVIOUS POST // NEXT POST>>
Did you like this post? If so, could you "blanjah" me 1/4 cup of my morning coffee pls.
Many thanks for continuing to come to this blog to read my posts.