The School of Buffett is No Longer Relevant
When I think about Warren Buffett, I think about America in the 1950’s and 60’s. Apple pies, ham and cheese sandwiches, lemonade stands, mowing the lawn for dad, and delivering newspapers on your bike for 2 quarters a day — a caricature of post WWII American excellence.
It goes without saying that he’s one of the richest people in the world, a few months away from being 90 years old. And to give credit where it’s due, he is one of the wisest and experienced investors in history. He was incredibly smart in his prime and could detect patterns that very few could. He’s also incredibly patient (which is the only true key to investing success, btw).
You’ve probably seen his quotes all over the internet
We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
Or how about this gem
Our favorite holding period is forever.
He’s also inspired a lot of people to purchase The Intelligent Investor by Benjamin Graham and has a lot of people focused on the big prize on their way to being hundred-thousandaires in their 40s.
He’s a man who’s played by boomer rules and won.
Here’s why you and I and most everyone else won’t win with Warren’s methods. The man’s made $5,000 when he was 14 and basically compounded extremely early. $5000 when he was 14 is equivalent to $53,000 today.
Show me a 14 year old who’s earned $53,000 by themselves and I’ll show you someone who never has to learn investing from someone else.
In addition, what this last crisis, and possibly the last 10–20 years has revealed was he’s lost a step. That’s okay, because give the guy a break, he’s 90.
Market trends have moved on from this man.
And you as an ‘investor’ have to move on.
Here’s a guy who had late entries into Apple and Amazon, and previously refused to pay attention to technology, simply because he doesn’t understand it.
He’s been getting by on name and size alone, and he has so much gravity he no longer even has to try to do any real analysis. All Warren Buffett needs to do is enter a position, announced that he’s entered a position, and the price will pump.
Here’s a snapshot of Berkshire’s holdings as of 3/31/2020 of everything over half a billion
As you can see, a lot of old school companies. His age is showing through his company’s holdings, it’s not looking too hot. And — get this, he’s dropped all his airlines holdings.
While major indexes appear to be having V shaped recoveries, Berkshire looks like this:
So what’s my point here?
I believe that it’s never been easier to generate alpha during this era of misinformation and sensationalism leading to opportunities to capitalize on high volatility. It’s never been easier to spend time learning technology and software industry trends and be first in line for moon mission type gains. It’s never been easier to swing left and right with zero commission trades until you land a home run.
You also have to find a modern and more relevant investor to learn from if you’re going to try to learn from someone.
Or you can stick with the boomer and just get outperformed by everyone else who’s moved on.
This story is originally from my substack, Sh*tposts, where I post commentary on investing, culture, tech and other random topics several times a week.