Are You Betting Against Buffett
G'day Fools,
I wrote this before Coronavirus reared its ugly head, but it could well have been after.
And after the next one. And the one after that…
Play me the world's smallest violin… but being a professional Fool isn't easy.
No, I'm not complaining about the work I have to do. Or the responsibility, knowing many thousands of you follow our advice. I'm not even complaining about the times when attractively priced investments are thin on the ground, or when a recommendation goes bad.
Those are just the realities of the job we do. It's why you pay us, frankly.
No, the hardest part of what we do is trying to combat the rubbish that's printed in the financial press, written on Twitter, spoken on TV, shared in (other) forums and believed by investors.
No, not everything is rubbish. Quite a lot of it is great. But there is some absolute tripe out there.
Some of it is stupid stuff, written by stupid people. Some is stupid stuff, espoused by smart people. And a whole lot of it is the so-called 'accepted wisdom' that is out there, just waiting to steal your returns.
A list to ignore
Daily market moves? Irrelevant
Oil price 'surging' or 'crashing'? Wait a day or two
Trump, Clinton, Turnbull, Shorten? A sideshow
Vested interests peddling their own views? Fish and chip wrappers
Paid-for 'research' supporting such vested interests? As above
Media commentators who are so conflicted it's laughable? Doing more harm than good.
Don't get me wrong — I'm an optimist. I'm probably the most optimistic investor here at The Motley Fool. There's plenty of stuff you could worry about — but I refuse to… knowing that the long-term returns will put today's worries in perspective, just as it has for years and decades past.
So my frustration can be boiled down to this: listening to the wrong things said by the wrong people will steal your long-term returns. Doomsters, shysters, pundits, economic 'analysts'… it's all useless.
What would Warren Do?
We quote Warren Buffett a lot. Even my editor at Fairfax said the other day "I think we overdo the Buffett quotes". She gets to decide that for my Fairfax columns — but not here.
An old CEO once told me "even when you think you're over-communicating, keep going". So, with apologies to her, even when we think we're over-quoting Uncle Warren, we're going to keep going. Because he's earned his stripes.
And, in life, but especially in investing, there are zero points for originality and zero points for degree of difficulty.
We're welcome — indeed encouraged — to learn from the best. And the best is Warren Buffett.
So, tell 'em what you said, Warren:
"Forming macro opinions or listening to the macro or market predictions of others is a waste of time."
Yeah sure, but…
"In the 54 years [Charlie Munger and I] have worked together, we have never forgone an attractive purchase because of the macro or political environment, or the views of other people. In fact, these subjects never come up when we make decisions."
Right, but you don't really mean it…
"Indeed, we have usually made our best purchases when apprehensions about some macro event were at a peak. Fear is the foe of the faddist, but the friend of the fundamentalist."
Next time you read someone giving investment advice based on what's happening in the economy, or you think you're smarter than the average bear when it comes to reading the macro tea leaves, ask yourself: Am I really smarter than Warren Buffett? Am I really improving my results by trying to punt on macro conditions or events I can't influence, let alone predict?
Or, much more simply, What Would Warren Do?
Foolish takeaway
No, you're not Warren Buffett. Neither am I. But my money says we're better being pale imitations than trying to contradict him.
We all want to be smart. We're wired to want to feel like we're adding value — and we're wired to need to 'take a view' on everything we see.
You know what's smarter than having a view on everything? Knowing the difference between what matters and what doesn't — and ignoring the latter.
That's what Warren would do.
Fool on!
