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Warren Buffett: More Myth than Legend
Posted by: AlbertaSunwapta (IP Logged)
Date: July 16, 2013 11:44PM

Some glaring errors in this writer's logic... Thoughts everyone?

Warren Buffett: More Myth than Legend
[www.marketwatch.com]


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Re: Warren Buffett: More Myth than Legend
Posted by: Bill.Smith (IP Logged)
Date: July 17, 2013 06:59AM

Thanks for the link. I've got to wonder if he's ever read a BRK shareholder letter. Judging by the tone, I think he falls into the Buffett-haters camp. Here's a comparison of BRK.B to the SPY since 1998 here. Even over the writer's stated time period, that still looks like outperformance to me.


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Re Warren Buffett More Myth than Legend
Posted by: AlbertaSunwapta (IP Logged)
Date: July 17, 2013 08:07PM

Highly biased time span selection seems to be a common practice by those trying to flog their points of view. Coincidentally, or not, about 15 years ago Buffett was telling the public to avoid buying Berkshire Hathaway shares (specifically BRK.b shares) due to their high valuation.

Additionally, few, possibly quite literally no investor committed a lifetime of savings to an index or shares in BRK at a single point in time, particularly the 15-year old point in time represented by the author. Most if not all people save and then allocate those savings over time and so any minimally respectable comparison must show returns based on multiple purchases over time, or as a worse case, use multiple simplistic time span return comparisons such as 1, 3, 5, 10, 15 year comparisons.

A third factor is the fact that the market decides the price based return of BRK and not Buffett. The whole premise behind value based indexing is that the EMH theory is flawed, and so values are to be found via various methodologies, so to think that the author's 1998 or 2013 prices reflect the value and ability of Buffett is seriously flawed. Even, the broader based indexed returns are unlikely to reflect returns that would accrue on an intrinsic value basis over the stated period, for the aggregate index components. The market provides real but forever biased non-intrinsic returns.

The author did make an interesting point regarding value indexes but Buffett himself has been critical of the growth vs value investing dichotomy used by the industry.


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