The first post on this thread states that this thread belongs in Econ and not Trading. I respectfully disagree. Buffett is certainly not an economist and he certainly is a trader.
a. Despite popular opinion, Buffett does not buy and hold. Historical examples include Disney and McDonalds, both companies he bought and sold several times. More recently, his holdings in LVLT and AMZN were more trades rather than buy and hold decisions. The idea that his "holding period is forever" is just bullshit intended to keep people from frontrunning the $50B that he has to slosh around.
b. The notion that Berkshire is a big value equity mutual fund is also incorrect. Until last year, for the three years prior, Buffett had at least 50% of his holdings or more in bonds.
c. Silver. From what I hear, he did sell his silver holdings. Not sure if he sold at a loss though.
d. Derivatives. Buffett says he hates the use of derivatives. More recently, the FASB (who agrees with Buffett) requires the disclosure of complex derivs on the balance sheet. Who did this screw the most? Why, Berkshire Hathaway, because of their little-known investment in hedge fund West End Capital, now has to disclose over $20B in derivatives (off of a $500M investment) on their balance sheet.
e. Note that West End Capital is run by John Byrne's son (Byrne has run insurance companies for Buffett in the past). Buffett's attempt to make this an off balance sheet transaction to a related party (think Enron) did not work out too well.
f. Back to the trading question: Buffett is also well-known for arbitrage short-term trading strategies. In fact, probably half the profits of his hedge fund (1957 - 1969) came from arbitrage.
All of this said, there is no arguing that Buffett has built a good company and has a great and enviable track record. I am actually more disgusted with his supposed emulators and the media adulation than the man himself. I've been to the Berkshire Hathaway annual meetings, I've listened to the critics, and I'm currently contracted to write a book on "Buffett and trading" and I think there's a lot to be learned from studying the approaches he's used particularly in the past few years in distressed trading, convert arb, silver, currencies, etc.
