Tuesday, November 25, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Buffett investment approach not what you may think

sievers column sig

By
From page B8 | June 22, 2014 |

Every year when Warren Buffett releases his annual report on Berkshire Hathaway, I always find it to be interesting reading. It is an excellent counterpoint to the usual superficial financial reporting in the media.

Too often the financial media focuses on the wrong topic, mainly because it sounds sensational and will sell. For example, when the media raises the subject of beating the market through astute stock picking, they often cite Warren Buffett. But what does this legendary investor actually say about the smart way to invest?

Buffett is considered to have such a track record of picking stock winners and avoiding losers that his annual letter to shareholders in his Berkshire Hathaway conglomerate is treated as a major event by the financial media. But the media emphasis is off target.

Usually the reporters are obsessed with current issues they can whip into a “crisis.” What does he think about the Federal Reserve taper? What could be the implications for emerging markets of a Russian military advance into Ukraine? What does an economic slowdown in China mean for developed markets?

Buffett has a neat way of parrying these questions from journalists and analysts. Instead of offering instant opinions about the crisis of the day, he recounts in his most recent annual letter a folksy story about a farm he has owned for nearly 30 years.

He states that he has not laid awake at night worrying about fluctuations in the farm’s market price. Instead, he has focused on its long-term value. He counsels investors to take the same sanguine, relaxed approach to liquid investments such as shares as they do to the value of their family home.

“Those people who can sit quietly for decades when they own a farm or apartment house too often become frenetic when they are exposed to a stream of stock quotations,” Buffett said. “For these investors, liquidity is transformed from the unqualified benefit it should be to a curse.”

While many people seek to ape Buffett in analyzing individual companies in minute detail in the hope of finding a bargain, he advocates that the right approach for most people is to let the market do all the work and worrying for them.

“The goal of the nonprofessional should not be to pick winners,” Buffett wrote in his annual letter. “The regular investor who both diversifies and keeps his costs minimal is virtually certain to get satisfactory results.”

As to all the predictions out there about interest rates, emerging markets or geopolitics, there will always be a range of opinions, he says. But we are under no obligation to listen to the media commentators, however distracting they may be.

“Owners of stocks . . . too often let the capricious and irrational behavior of their fellow owners cause them to behave irrationally,” Buffett says. “Because there is so much chatter about markets, the economy, interest rates, price behavior of stocks, etc., some investors believe it is important to listen to pundits and, worse yet, important to consider acting upon their comments.”

The Buffett prescription isn’t rocket science, as one might expect from an unassuming, plainspoken octogenarian from Nebraska. He rightly points out that an advanced intellect and success in long-term investment don’t necessarily go together.

“You don’t need to be a rocket scientist,” he has said. “Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.”

I think Buffett is spot-on in his opinions. But maybe that is because those are my opinions as well.

Mark Sievers, president of Epsilon Financial Group, is a certified financial planner with a master’s in business administration from the University of California, Berkeley. Contact him at mark@wealthmatters.com.

LEAVE A COMMENT

Discussion | No comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

.

Solano News

Soroptimists seek award applicants

By Glen Faison | From Page: A5

 
Science comes to library – for all to see

By Glen Faison | From Page: A5

Nichols plans free family concert in Napa

By Glen Faison | From Page: A7

 
Library schedules soap-making program

By Glen Faison | From Page: A5

Church’s holiday soiree on Vacaville calendar

By Glen Faison | From Page: A7

 
Vacaville PD seeks VIPS program volunteers

By Glen Faison | From Page: A5

 
 
Volunteers help Mission Solano pack for food giveaway

By Amy Maginnis-Honey | From Page: | Gallery

 
Fairfield police log: Nov. 23, 2014

By Glen Faison | From Page: A9

Fairfield police log: Nov. 22, 2014

By Glen Faison | From Page: A9

 
Suisun City police log: Nov. 23, 2014

By Glen Faison | From Page: A9, 1 Comment

Suisun City police log: Nov. 22, 2014

By Glen Faison | From Page: A9

 
.

US / World

Incumbent Democrats lose in 2 close California Assembly races

By The Associated Press | From Page: B2

 
VA fires Phoenix hospital director

By The Associated Press | From Page: B2

Iraqi troops take 2 towns from Islamic State group

By The Associated Press | From Page: B2

 
Iran nuclear talks stumble, extended until July

By The Associated Press | From Page: B2

Brown names assistant US attorney to high court

By The Associated Press | From Page: B2

 
Driver fatigue may have caused California crash

By The Associated Press | From Page: B2, 1 Comment | Gallery

Israel resumes razing homes to punish attackers

By The Associated Press | From Page: B2, 2 Comments | Gallery

 
GOP wisdom shifts on immigration

By The Associated Press | From Page: B2, 8 Comments | Gallery

Under pressure, Hagel steps down as Pentagon chief

By Maureen Fissolo | From Page: B2 | Gallery

 
No charges in Ferguson case; chaos fills streets

By The Associated Press | From Page: B2, 62 Comments | Gallery

.

Opinion

 
Senate staff cuts reduce transparency

By Dan Walters | From Page: A8

.

Living

Community Calendar: Nov. 25, 2014

By Susan Hiland | From Page: A2

 
.

Entertainment

‘Wizard of Oz’ Cowardly Lion costume fetches $3M

By The Associated Press | From Page: B3

 
Miller puts own spin on longtime ‘GH’ character

By The Associated Press | From Page: B3 | Gallery

‘Today’ looks to rebound from tough week

By The Associated Press | From Page: B3

 
Review: Turmoil helps AC/DC shine on new album

By The Associated Press | From Page: B3

Guitarist: Leon Russell band’s instruments stolen

By The Associated Press | From Page: B3

 
Sting tries to help his ailing Broadway musical

By The Associated Press | From Page: B3 | Gallery

In wake of Spotify pullout, music industry debates streaming

By The Associated Press | From Page: B3

 
Bill Weir’s new CNN series to begin in 2015

By The Associated Press | From Page: B3

TVGrid Nov 25

By Daily Republic Syndicated Content | From Page: B6

 
.

Sports

Forsett leads Ravens past Saints, 34-27

By The Associated Press | From Page: B1 | Gallery

 
Bills rout Jets 38-3 in rescheduled game

By The Associated Press | From Page: B1

Even top NFL teams have taken steps back

By The Associated Press | From Page: B1

 
Aldon Smith helps lead in 49ers’ 3rd straight win

By The Associated Press | From Page: B1

Rod Streater returns to practice for Raiders

By The Associated Press | From Page: B1

 
Taylor apologizes, won’t appeal NBA suspension

By The Associated Press | From Page: B1

Johnson, Martinez, Smoltz on Hall of Fame ballot

By The Associated Press | From Page: B1 | Gallery

 
No. 1 Kentucky gives Kansas a Top 25 tumble

By The Associated Press | From Page: B1

LeBron on Cavaliers’ issues: “I stink”

By The Associated Press | From Page: B1

 
Police: Manziel’s entourage attacked fan at hotel

By The Associated Press | From Page: B1

Giants set record with $388,606 postseason shares

By The Associated Press | From Page: B1

 
Longtime NHL coach, executive Pat Quinn dies at 71

By The Associated Press | From Page: B1

Pablo Sandoval reaches multiyear deal with Red Sox

By The Associated Press | From Page: B1 | Gallery

 
San Francisco turning to groundwater for its taps

By The Associated Press | From Page: B2

South Carolina the new No. 1 in AP women’s hoops

By The Associated Press | From Page: B1

 
.

Business

Budweiser gives Clydesdales holiday pink slip

By The Associated Press | From Page: B4, 3 Comments

 
Redbox raising DVD rental rates by 25 percent

By The Associated Press | From Page: B4

New FDA rules will put calorie counts on menus

By The Associated Press | From Page: B4

 
Unidentified country likely behind spying software

By The Associated Press | From Page: B4

Honda admits failing to report deaths, injuries

By The Associated Press | From Page: B4

 
United Technologies CEO retires, succeeded by CFO

By The Associated Press | From Page: B4

Nike extends contract with USOC through 2020

By The Associated Press | From Page: B4

 
High-end home sales surge in Southern California

By The Associated Press | From Page: B4 | Gallery

.

Obituaries

.

Comics

Rose is Rose Nov 25

By Daily Republic Syndicated Content | From Page: B4

 
Peanuts Nov 25

By Daily Republic Syndicated Content | From Page: B4

Pickles Nov 25

By Daily Republic Syndicated Content | From Page: B4

 
Sally Forth Nov 25

By Daily Republic Syndicated Content | From Page: B4

Get Fuzzy Nov 25

By Daily Republic Syndicated Content | From Page: B4

 
Bridge Nov 25

By Daily Republic Syndicated Content | From Page: B5

Sudoku Nov 25

By Daily Republic Syndicated Content | From Page: B5

 
Cryptoquote Nov 25

By Daily Republic Syndicated Content | From Page: B5

Garfield Nov 25

By Daily Republic Syndicated Content | From Page: B4

 
Frank and Ernest Nov 25

By Daily Republic Syndicated Content | From Page: B4

Wizard of Id Nov 25

By Daily Republic Syndicated Content | From Page: B4

 
Word Sleuth Nov 25

By Daily Republic Syndicated Content | From Page: B5

Crossword Nov 25

By Daily Republic Syndicated Content | From Page: B5

 
Baby Blues Nov 25

By Daily Republic Syndicated Content | From Page: B4

For Better or Worse Nov 25

By Daily Republic Syndicated Content | From Page: B4

 
Dilbert Nov 25

By Daily Republic Syndicated Content | From Page: B4

Blondie Nov 25

By Daily Republic Syndicated Content | From Page: B4

 
Zits Nov 25

By Daily Republic Syndicated Content | From Page: B4

Beetle Bailey Nov 25

By Daily Republic Syndicated Content | From Page: B4

 
B.C. Nov 25

By Daily Republic Syndicated Content | From Page: B4

Baldo Nov 25

By Daily Republic Syndicated Content | From Page: B4