My grouse with Warren Buffett

I have a serious issue with what Warren Buffett seems to teach people about investing and what people understand. You see Warren Buffett is everybody's famous investment idol. And people want to emulate him in his successful way of investing. So far so good.

Now the issue I am talking about is how simple he makes out investing to be. He has laid down his four characteristics of a good investment and people seem to think that's all there to his success.

I have read all the Berkshire letters, the earlier Buffett partnership letters and finished 'Snowball' in the first week of its release. I am not trying to show off my reading list. All I want to convey is that I am reasonably better informed than people who just look upto WB from the popular media or general books on him. Well all I can say is that he is a genius; a freak even; somebody like Newton or Einstein who comes once in a generation and one needs to keep that in mind.

So why do people think WB is an easy act to follow? Because of the way WB tells them; his letters are full of sensible humour and he conveniently guides the reader to omit certain sections which are slightly difficult to understand. Now compare this to say, Michael Phelps. Supposing if one were to ask him his secrets of success and he replied: " Oh, work hard, work out regularly, concentrate and practice a lot". Will anyone just take this for an answer. Our minds will probably tell us 'Working hard means more than 6 hours a day plus he started practicing long ago plus he has a unique physique suited for swimming' and other factors. Added to the fact is that, not everyone wants to be a champion swimmer.

But when it comes to investing, almost everyone wants to be a champion investor. My sincere suggestion to anybody who even remotely thinks he can be the next WB is to try and follow the same reasoning as above for Michael Phelps. WB has a unique set of brain wired for investing plus he started really young, reads and knows stuff like mad and he selects a few good business not only by their positive characteristics but also by rejecting a whole lot of bad businesses which also he knows in and out.

Of course, I don't mean to convey that listening to WB is useless. Far from it. Just listening to WB will, I am sure for many, improve our results (I recall a study done about six months back which said that if people bought stocks upto 45 days after WB announced, they still trounced the markets 2 to 1). We must do what he says, improve our results while at the same time not think that WB's long record will be easy to emulate. Doing so will only increase our own sense of despair and frustration.

We must keep in mind the following quote from WB's guru, Ben Graham: "To achieve satisfactory investment results is easier than most people realize ; to achieve superior results is harder than it looks" and use WB's guidance in ensuring our satisfactory results.