Saturday, December 27, 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

Suisun Valley celebrates appellation’s anniversary

By Daily Republic staff | From Page: A1 | Gallery

 
Suisun museum adds Japanese-American internment exhibit

By Ian Thompson | From Page: A1 | Gallery

Girl’s selfless act boosts Suisun Wildlife Center

By Susan Hiland | From Page: A2

 
Beer for 1st butterfly of year challenge returns

By Ian Thompson | From Page: A3 | Gallery

 
Fairfield firefighters save Christmas for family

By Ian Thompson | From Page: A3

SF Giants championship trophy coming to Vacaville

By Ian Thompson | From Page: A3

 
Fire damages Fairfield home

By Ian Thompson | From Page: A3

Car rolls over on Highway 113

By Ian Thompson | From Page: A3

 
Fairfield man killed after family gathering in Napa

By Daily Republic staff | From Page: A4, 1 Comment

USA Weekend magazine ceases publication

By Glen Faison | From Page: B6

 
Suisun City police log: Dec. 25, 2014

By Susan Hiland | From Page: A9

Fairfield police log: Dec. 25, 2014

By Susan Hiland | From Page: A9

 
 
.

US / World

California braces for first widespread frost

By The Associated Press | From Page: A1

 
California gears up for migrant driver’s licenses

By The Associated Press | From Page: A1

Inmate breaks out of jail through ventilation duct

By The Associated Press | From Page: A4, 1 Comment

 
People slide down bedsheets to escape motel fire

By The Associated Press | From Page: A4

Court: LA Police Department policy for impounding cars is OK

By The Associated Press | From Page: A4

 
Man shot to death in struggle over officer’s baton

By The Associated Press | From Page: A4

4 dead in fiery Northern California car crash

By The Associated Press | From Page: A4

 
Police officer shoots woman in leg in Hollywood

By The Associated Press | From Page: A4, 2 Comments

Bodies of woman, 3 grandsons found in burned home

By The Associated Press | From Page: A5

 
Truck crashes into home; 93-year-old resident dies

By The Associated Press | From Page: A5

Scientists target mess from Christmas tree needles

By The Associated Press | From Page: A5

 
Baby ostracized by other gorillas will switch zoos

By The Associated Press | From Page: A5

Thousands attend 8-hour wake for slain NYC officer

By The Associated Press | From Page: A5, 1 Comment

 
Study: Marijuana use has increased in Colorado

By The Associated Press | From Page: A5

Dog not gone: Rescue in the Columbia Gorge

By The Associated Press | From Page: A5

 
Feline fame in cyberspace gives species a boost

By The Associated Press | From Page: A6

Lawmakers promise to help strapped oil-patch towns

By The Associated Press | From Page: A6

 
At 101, dedicated union rep is calling it quits

By The Associated Press | From Page: A10

Can GOP shatter ‘Obama coalition’ in 2016?

By The Associated Press | From Page: A10

 
GPS used to track some immigrants caught at border

By The Associated Press | From Page: A10

10th anniversary of tsunami is marked with tears

By The Associated Press | From Page: A11

 
.

Opinion

Sony hack is reminder of broader Sony dysfunction

By William Pesek | From Page: A8

 
A proud man, a good honorable man

By Letter to the Editor | From Page: A8, 4 Comments

 
.

Living

Today in History: Dec. 27, 2014

By The Associated Press | From Page: A2

 
Community Calendar: Dec. 27, 2014

By Susan Hiland | From Page: A2

Horoscopes: Dec. 27, 2014

By Holiday Mathis | From Page: B5

 
Remember, caregivers need some care attention, too

By Kathy Mitchell and Marcy Sugar | From Page: B5

Cow that fled slaughterhouse in 2006 has new home, again

By The Associated Press | From Page: B10

 
.

Entertainment

TVGrid

By Daily Republic Syndicated Content | From Page: B6

 
Jazz great Buddy DeFranco dies at age 91

By The Associated Press | From Page: A7

 
1990s TV star ‘Screech’ charged in bar stabbing

By The Associated Press | From Page: A7

.

Sports

Cleveland reaches 50 years of sports futility

By The Associated Press | From Page: B1 | Gallery

 
Games to Remember from 2014

By The Associated Press | From Page: B1 | Gallery

 
Suns outlast Kings 115-106 for 5th straight win

By The Associated Press | From Page: B1

Anthony Davis, Roman meet over tweet

By The Associated Press | From Page: B1

 
Arizona’s Lindley back at starter, Stanton has infection

By The Associated Press | From Page: B2

Prep JV boys basketball: Vanden gets win in Dixon tourney

By Daily Republic staff | From Page: B2

 
Could Watt be 1st NFL MVP from defense since Taylor in 1986?

By The Associated Press | From Page: B2

Dan Uggla joins Nationals for minor league deal

By The Associated Press | From Page: B2

 
Georgia’s Richt: RB Todd Gurley heading to NFL

By The Associated Press | From Page: B2

Slumping New Jersey Devils fire coach Pete DeBoer

By The Associated Press | From Page: B2

 
No. 1 Kentucky, No. 4 Louisville resume rivalry

By The Associated Press | From Page: B2

Raiders rookie CB makes most of opportunity

By The Associated Press | From Page: B2

 
High-scoring offenses create longer college games

By The Associated Press | From Page: B2

Anderson: post-game petulance was out of character

By The Associated Press | From Page: B2 | Gallery

 
Chiefs QB Alex Smith out with lacerated spleen

By The Associated Press | From Page: B2

Globetrotters’ Robert ‘Showboat’ Hall dies

By The Associated Press | From Page: B2

 
NC State wins Bitcoin Bowl to cap turnaround year

By The Associated Press | From Page: B2

Rutgers beats North Carolina in Quick Lane Bowl

By The Associated Press | From Page: B2

 
La. Tech beats Illinois 35-18 in Heart of Dallas Bowl

By The Associated Press | From Page: B2

This date in sports history for Saturday, Dec. 27, 2014

By The Associated Press | From Page: B3

 
Weather for Saturday, Dec. 27, 2014

By Daily Republic staff | From Page: B11

 
.

Business

In 2014, US economy began shaky, finished strong

By The Associated Press | From Page: A1

 
Missouri 1st to see average gas price below $2

By The Associated Press | From Page: B6

Holiday deliveries improve but hiccups continue

By The Associated Press | From Page: B6

 
.

Obituaries

John Benjamin Calvin Adams

By Nancy Green | From Page: A4

 
Frances Cruz Pangelinan

By Nancy Green | From Page: A4

.

Comics

B.C.

By Daily Republic Syndicated Content | From Page: B4

 
Sally Forth

By Daily Republic Syndicated Content | From Page: B4

Zits

By Daily Republic Syndicated Content | From Page: B4

 
For Better or Worse

By Daily Republic Syndicated Content | From Page: B4

Pickles

By Daily Republic Syndicated Content | From Page: B4

 
Garfield

By Daily Republic Syndicated Content | From Page: B4

Frank and Ernest

By Daily Republic Syndicated Content | From Page: B4

 
Baby Blues

By Daily Republic Syndicated Content | From Page: B4

Blondie

By Daily Republic Syndicated Content | From Page: B4

 
Rose is Rose

By Daily Republic Syndicated Content | From Page: B4

Peanuts

By Daily Republic Syndicated Content | From Page: B4

 
Wizard of Id

By Daily Republic Syndicated Content | From Page: B4

Dilbert

By Daily Republic Syndicated Content | From Page: B4

 
Get Fuzzy

By Daily Republic Syndicated Content | From Page: B4

Baldo

By Daily Republic Syndicated Content | From Page: B4

 
Beetle Bailey

By Daily Republic Syndicated Content | From Page: B4

Crossword

By Daily Republic Syndicated Content | From Page: B5

 
Cryptoquote

By Daily Republic Syndicated Content | From Page: B5

Sudoku

By Daily Republic Syndicated Content | From Page: B5

 
Bridge

By Daily Republic Syndicated Content | From Page: B5

Word Sleuth

By Daily Republic Syndicated Content | From Page: B5

 
.

Home Seller 12/27/14

Real estate transactions for Dec. 27, 2014

By Daily Republic | From Page: HSR2

Average US 30-year mortgage edges up slightly

By The Associated Press | From Page: HSR2