Warren Buffett killed thousands of traders last October of 2008 when he told them to buy.
He wasn’t always a moron-murderer, but he is now.
Age has finally done the man in.
Berkshire Hathaway employees and share holders should be very fearful right now.
Case in point: Buffett’s statement on October 16, 2008, “the market will move higher, perhaps substantially so.”
He then proceeded to buy an estimated $20 billion worth of stocks.
Any trader following Buffett and jumping in to buy in October of 2008 would have been killed.
So was Buffett that general from behind the lines yelling to his minions, “Charge!”–or was Buffett leading the charge?
We now know from Buffett’s 10-K filing that he indeed led the charge.
What I find funny is media outlets like The Fool who publish articles stating, “Buffett…as the world’s richest man, record speaks for itself. So when he wrote in that October New York Times editorial that he’s buying now because it is likely that “the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up,” Fools would do well to take heed.”
Anyone who has been trading for a number of years in the market knows that past performance is meaningless. You are only as good as your last trade. How much Buffett made as a trader back in the stone ages, before the Internet and online trading was even possible, has nothing to do with how right he is today.
If you interpret “Fools” in its literal sense, then I would have to say that The Fool was right. Only a total fool would have taken heed and followed Buffett into the markets back in October of 2008.
Any Fools who did are now dead. How is their General Buffett doing?
October 16, 2008, Walmart was trading around $55. Today Walmart trades around $49. That’s a 10% loss. For Buffett that 10% down is hundreds of millions of dollars.
Had Buffett been a more disciplined trader and waited with patience rather than to buy suddenly with emotion, he could have bought Walmart four months later at $46.43!
In otherwords, Buffett pulled the buy trigger 4 to 7 months too early and probably more. Buying in a few weeks early is one thing, but failing to time a recession bottom by 7 months and probably more?! That’s just stupid.
But it gets a lot worse than Walmart.
If you look at what else he bought last October, Goldman Sachs (GS) and General Electric (GE), you understand that Buffett’s money costs more to borrow than a local bookie.
As has been reported, Warren Buffett lost approximately $9.6 billion dollars in equity value due to decreases in company market capitalization and share prices.
Why did Buffett do it? Because he’s old. A younger Buffett said, “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” Looks like Buffett violated his own rule.
Think of it like this, had you bought into the stock market in October of 2008 when Buffett gave the command, you’d still be hoping the market was going to come back 7 months later.
Meanwhile, guerilla stock traders who were nabbing a 5% gain a week by holding short term would be up 140% over the same time span.
Marc Faber, even told CNBC recently: “The Warren Buffett approach of buy and hold is dead and it’s been dead for ten years and it’s going to be dead for another ten years.”
You then realize that Warren Buffett does not make most of his money from his trading activities anymore. Warren Buffett makes his money by writing high interest loans.
Too many people in the markets try and look for Buffett type leaders to follow. This is a classic example of why you shouldn’t look for heroes and leaders to follow. It is unknown how many tens of thousands of traders followed Buffett to their deaths in October of 2008.
I hope you enjoyed this article. Leave any comments you might have below. Thank you and happy improved trading.
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(because everyone, even Tiger Woods, needs a coach)