Is the “Oracle of Omaha” over-rated ?, The Oracle of Oma-Hype? , Sep 14, 2009

Clint Goodrich …  went from horse racing to futures trading—both occupations require focus and brutal tenacity. He  trades for some high net worth clients. His investments have averaged 22 percent gains a year over the last five years, and while he took a beating in the fourth quarter last year (who didn’t?), this year he’s up nearly 32 percent.

Goodrich thinks Buffett isn’t much of an oracle:

I think Warren Buffett is overrated. My thinking is a collective of many years of watching and listening to everyone in the media lionize this guy. As a trader and manager of money, I follow the money, literally. Clearly he’s not some stooge. He’s been successful, is shrewd and lived in the same Omaha house since 1955. However, a few simple insights into his track record leave me a little cold and not so convinced about his title “World’s Greatest Investor”.

If you bought one share in BRK.A at the “open” on Sept 10, 1999 you spent $62,500. On Sept 9, 2009 that same share was worth $97,900 on the “open”, an increase over 10 years of $35,400 (+56.64 percent appreciation), or an average simple return of +5.66 percent per year. To me, this is historically just a reasonable rate of return on a 30-year U.S. Treasury Bond, and certainly a less than spectacular rate of appreciation for someone titled “The World’s Greatest Investor”. Oh, and by the way, a 30-year U.S. Treasury is guaranteed.

Mr. Buffett is that he demonizes traders and calls derivatives “weapons of financial mass destruction”, when he himself holds some of the largest derivative positions in the world! It’s OK for him to hold derivatives but not others?

He missed the tech run, he lost billions in his US dollar position, and he apparently had no inkling of the financial crash that swept the markets in the fall of ’08 through the spring of ’09.

In general, he’s a buy and hold forever guy with a seemingly blind eye to taking profits and looking for the next opportunity. What is up with not letting go of a position, taking the profit and moving on?

Of course, the weak point in my argument would be, that so far…..he has more money than I do. But hey, that’s what makes a market!

Full post:

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One Response to “Is the “Oracle of Omaha” over-rated ?”

  1. Consultant Ninja Says:

    Interesting start and end dates. This guy is just spouting off. His argument, would say that long-term investors would be better off buying T-bills than the S&P 500 index (per the below link).

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