Is Warren Buffet the Most Overrated Investor?
Warren Buffet is like a cult. He is unarguably the most celebrated investor on the planet.
Investors and traders swear by his name. He is the most quoted investor in the world.
But is he that great?
Is not he the most overrated investor?
I always felt his achievement are more of a chance than skill.
I am not saying he is not great, but certainly overrated.
When I recently watched Shankar Sharma’s opinion about him I jumped with joy.
He snatched the thoughts I felt.
And he is not anything. He is one of the most logical and intelligent minds on the street.
And what I love about him is that he does not mince his words when sharing his opinion.
Explaining his opinion, Shankar says,” he is at best a mediocre investor. He taught many good things, but he also taught many rubbish things.”
Even his track record is not that great.
Warren Buffet is synonymous with his Coca-Cola investment. But from 1993 until now, Coke is just 8 times up, while S &P 500 is 12 times up.
Even Pepsi is 30 times up.
That means it failed to beat the index.
He missed the complete technology bull run of Apple, Google, Netflix as he himself shared his reservations about technology stocks.
However, at last, he invested in IBM and lost badly.
In fact, Jim Simons, the iconic hedge fund manager has given 66% annualized return. His record is far more impressive than Warren Buffet.
He gave many wrong suggestions that destroyed many investors, such as the virtues of a concentrated portfolio and not doing diversification.
People took it by heart and then lost big money because of the lack of a diversified portfolio.
Then another bogus theory is you cannot time the market.
Shankar says if you cannot time the market, you cannot make money.
Can you catch a flight if you reach late at the airport?
Timing is crucial to succeeding in every aspect of life, and so in investment.
In the market, only the balance sheet and income statement do not work but there are various factors at play.
And yes, timing is absolutely crucial to make big money in the market.
If you fail to catch the big trend in the Smallcap sector at the start and get to it at a later stage, you will lose for sure.
That means you don’t need to time every stock, but timing the broad market cycle is essentially crucial if you want to make big money.
Then he made many poor decisions.
For example, in 1993, he purchased Dexter Shoe Co. for $433 million in Berkshire Hathaway stock. It cost him a $3.5 billion loss to investors.
His lack of foresight resulted in not buying Amazon and rather he made a dud investment in US Airways stock.
There are many more examples that prove his acumen is not as great as that of Peter Lynch and many other fund managers.
Don’t follow and worship him blindly. It will lead you to nowhere.
Shankar says that people often fall prey to lazy logic. It’s the time of Google and they should simply verify the fact.