Buffett-style investing - a discussion

Quote from NeoRio1:

I am not saying fundamental investing is impossible, I am just saying that if you compare your aspirations in fundamental investing to warren buffets success and style then you are in total denial of how good you can actually be. Where should you look to see results that could reflect your potential? Mutual Funds. Mutual Funds are full of people who never actually worked or run businesses. By the way the average mutual fund in the last 9 months is down so that tells you a lot about how well mediocre fundamental investors can do during rough economic times.
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The best investment managers and traders have typically never worked at a "normal" business. If what you said was correct, all the top investors would be people with extensive experience in business. But that's not the case - in fact, successful business people are on the whole notorious for making investment mistakes.

Buffett isn't exactly an operational businessman, he's more a business owner/investor - he hires operations guys and delegates too them. In any case, he is clearly a bit of a unique case. The fact remains that most top investors aren't businessmen, and never have been, yet they understand businesses just fine from an investment perspective. Ken Heebner has not worked in the housing industry but he still knew to buy homebuilders from 2000-2005 and then short the crap out of them and the mortgage industry in 2007 and 2008. How many bank managers or mortgage CEOs did the same?
 
Quote from Hook N. Sinker:

http://www.morningstar.co.uk/UK/funds/article.aspx?Site=UK&lang=en-GB&articleID=57393&categoryID=14

This is an article about Warren Buffet and energy deregulation.

Deregulation of electric utilities changes a lot of things. I remember searching Google for Texas and electricity. I notice lots of changes, lots of companies, lots of activity.
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I guess I just cannot see what Buffett saw.
Deregulation will make it easier for companies to compete against each other, and hence it reduces the moats, unless NRG has an edge. But I just don't see what edge NRG has.
 
I notice Berkshire Hathaway stock symbol BRKA shows about a 15 % price rally yesterday and is up about 26 % over the past 12 months. In comparison, the Standard and Poors 500 index value is down about 17 % over the past 12 months.
 

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I notice Ingersoll Rand (stock symbol IR) trading at the lowest price in about 4 years. I recall reading that Warren Buffet has an investment in the company. Yahoo is reporting IR price / book value as 0.96.
 
Not sure the old school approach will get you very far these days. The odds are definately against you.
Aside from the factors that make stock investing VERY risky (management, debt, etc...) I think it is almost impossible to ignore macroeconomics when
the expansion of the credit markets is being threatened (especially when it comes to small to mid caps). The changes of landing the next MSFT or Walmart
are really slim.

Look at Sadia (SDA) which just lost an entire year's earnings on one currency deal gone wrong. Here is a macro influence at work and it affected stock holders gravely.

Buffets states that one should ignore forcasts of the economy. This is easy to say when you have the entire post-WWII era of expansion at your back. So in a way he is forcasting it, by assuming that US economic forces will take care of upward movement. Even Peter Lynch states that one should rely on the prosepct of higher earnings and US economic expansion in the future. So they actually do predict Macro-events in relying on the fact that they will always be positive in the future.

btw, Coke has a moat... but will it expand further? Probably not.

Buffet is a Gordon Gecko with a better PR manager.. all I'm going to say.
 
Quote from Capablanca:

This isn't really that difficult. I get the feeling people make something simple into something difficult. If the cash registers are ringing and the stores are full, chances are better than even business is doing well. What trait allows you to figure this out? Common sense.
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But that is not sufficient in order to quantify possible pit falls and risks that could occur 10 years from now.
 
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