Category: Money tips Release Date: 2007-03-24
Market efficiency theory suggests that, due to the current stock prices already reflect all available information, it is purely a waste of time analyzing stocks, Buffett and others rely on the company analysis and market information, analysis of the success obtained can only be regarded as occasional small probability event It is a probability so small that virtually impossible to happen again statistical phenomenon. On this point there are different arguments. But we from the other point of view, Buffett phenomenon is not inevitable. In other words, we can learn from the experience of Warren Buffett by certain inspired to learn something, but Buffett is extremely difficult to imitate.
First of all, Murphy's Law that: anything as long as to the bad direction, it will go that direction. On the contrary it means, as long as the heading in the right direction, it is difficult to further good results. In 1965 and 1994 in 30 years, Warren Buffett's Berkshire Hathaway annual rate of return is only three years of lost gains in the S & P 500 Index, and the annual average growth rates as high as 23.3%, Pakistan Buffett last decade, the results are not inferior to the past. Like Buffett can get such a great success that people can say is unprecedented, but we want a good example to this line, it is more difficult. In the investment field, there are many people and learn respect for Buffett's investment methods, although there are a lot of money has made achievements, but their success mostly 1:01 places. The ratio terms, the outstanding persons, most people are also more than the number of failures the number of successful. Military field, there is a well-known example, that the great military strategist, before the Battle of Waterloo Napoleon had been regarded as a successful, two-thirds of his life in battle defeated. For most people, life is a matter of a normal likelihood, unhappy person, it is both in line with Murphy's Law also means that Buffett can not be copied.
Second, the elite few, if too many outstanding figures mean there are no outstanding figures. If we imagine that most managers and investors have access to an annual income higher than the Standard & Poor's index of more than 10% of the results, then it will be called the elite most people do? You can do the things you can do it, you have what rare it? If Buffett is also the case, it would not be higher than the elite crowd, there is nothing worth learning for the.
Again, herding is the vast majority of people can not overcome the psychological phenomenon. There are humorous point of view: an oil tycoon to Heaven to attend meetings, a discovery had been packed into the conference room, there is no place taking a seat, so he hit upon an idea, cried out: "The discovery of oil in hell!" This cry does not matter, heaven the oil tycoons have to go to hell, and soon, in heaven on the left who later had. The tycoon has committed at the moment, whispered: Everyone ran in the past, does it mean hell is really the discovery of oil it? So, he ran hastily hell.
Buffett's success is unusual because often thought and behavior. Buffett's approach is both unique and simple and easy to understand, which, while the positive side, there are the bad side, from the results, its methodology is still dominated by a good side. Such as network hot, Buffett invested in technology stocks did miss an excellent opportunity to obtain huge profits. But the stock market is a place where people get irrational, but Buffett has always been able to remain sober, so that brought him a lasting high returns.
Buffett's unique in that: First, are not concerned about the recent stock market volatility, will not do technical analysis (price-volume analysis) by the general stock market investors can not do, but Buffett was able to do so. Second, do not go after hot spots, most people can not do. Hot spots to attract the eye, causing investor concern about the recent excessive and therefore typically have short-term hot money effect. Do not chase hot spots, which means giving up the short term. Buffett keen on investment in traditional industries is indeed missed a lot of short-term opportunity, but he thinks some traditional industries, because they are familiar with and make investments with greater certainty. Third, most people advocated diversification of investments, while Buffett is opposed to diversification of investments, prefer to concentrate ownership. Diversification means that risk diversification, but also the average of the returns. Under normal circumstances, at most, to enable investors to diversify investment risk down to a low level, this approach will never be higher profits. As the spread of investment will also lead investors to a lack of understanding of investment objects and energy dispersion. For large funds, this just might bring a little greater risk.
On investment for Buffett is definitely a special case. Compared with the ordinary people, he certainly does not belong to the sheep, perhaps he was a lonely wolf.
Has been suspected of probability theory is of necessity can not be explained. Buffett does its own industries and companies are familiar with, which seems to have certain of winning, but Buffett's analysis of the company's growth can not exhaust the possibilities, he also chose a high probability event, so Buffett also has missed time. "Warren Buffett Way" author Robert G ยท Haige Shi dome also believe that, "Buffett himself can not guarantees of future implementation of this goal (23% average annual return on investment)."
From the above these aspects, we have reached with the market efficiency theory, the same conclusion: The world is full shares of Buffett's such a God, it is precisely a small probability event, is patched together from a number of causal factors of a special case. Therefore, each person can only try to find themselves as to their advantage of high probability event, but the effort a great success with this there is no causal relationship between the so-called Man proposes, God disposes is also. All in all, from the strict sense, Buffett is not imitation.
