An interesting, and instructive, article in Investment Advisor magazine made some great points about the Buffett legend. Like most legends, it’s part truth and part myth. In Buffett’s case there is more myth than truth.
Don’t get me wrong, Buffett is one of the world’s richest men, and a famous investor. But it’s not a rags-to-riches story. Son of a Congressman, young Warren had an elite education. He bought a farm while in high school, not something you can do with the income from a paper route.
The legend is that he’s just a folksy stock picker with a buy-and-hold strategy. The truth is that he made his first millions as a hedge fund manager, raking off 25% of the profits over a 6% hurdle rate. His most famous investments came from bailing out firms in distress like GE and GEICO when they were in financial trouble. Buffett got sweetheart deals from them because he had them by the throat and could lend them billions of dollars when they needed it fast.
That’s the edge that Buffett has that none of my other readers have. (Hi Warren)
One observer of Buffett wrote:
By oversimplifying this glorified investor named Buffett the general public gets the false perception that portfolio management is so easy a caveman can do it. And so we see commercials with babies trading from their cribs and middle aged men trading an account in their free time.
If you’re not Warren Buffett, what should your objective be with your investments? Think about your goals. See if they are reasonable. Determine what it will take to get you there. If you need help with this, get the advice of a professional. If you are fortunate enough to have already reached your financial goals, decide what it takes to make sure you don’t lose it.
And then, unless you are determined to make a career out of investment management, hire a competent, credentialed, experienced, fee-only Registered Investment Advisor to manage your portfolio for you. In other words, call Korving & Company – today – and make an appointment.