Warren Buffett explains how you could've turned $114 into $400,000 with a simple long-term investmen

[Arnie]

Disagree. Time is a plus, but not an edge on the market.

Technically you are right, but time is better than most of the edges people think they have.

 

[Scataphagos]

Technically you are right, but time is better than most of the edges people think they have.

Lots of traders think they have an edge, or hope they can find one, yadayada... Fact is, there is NO EDGE on the markets that is legal. Only ones I know of are illegal.... front-running and trading on insider info.

Anything else traders think of as "edge" is delusion.

(Even if you are a disciplined, savvy technical trader and believe "that's my edge", it isn't. You may have a comparative edge vs. other traders, but that's not the same as having an edge on the markets and in your trades. Trading the markets is plenty difficult enough without deluding yourself with the false notion of "edge".)

 

[Poindexter]

I try to beat this into my nephews and nieces. And I cringe when I see some young, newbie on here wanting to know how to "trade". They have the one thing that truly is an edge.....time.

Ditto. Interesting excerpt from one of Buffett's letters to shareholders on where to put it and why:

 

[trader99]

If you're a "half-decent" trader, you can STOMP Buffett's "buy and hold".

Unfortunately, becoming "only half-decent" at coping with the markets is difficult

If you're a "half-decent" trader, you can STOMP Buffett's "buy and hold".

Actually, that's NOT a true statement. Buffett had a bet with a hedge fund 10 years ago that buying and holding the index will beat an index of hedge fund managers(supposedly "half-decent" traders or active managers). And the hf manager lost the bet.

It's kind of difficult to beat buy and hold a broad index..

 

[pipeguy]

Amazing power of long-term investing in U.S. index. But the example Buffett gave was probably the best run of any equity markets in the world. This figure is over 76 years.

You think the next 76 years will have the same amazing run in equity markets?

If so then just buy index regularly and forget about it. If not then trading makes total sense.

https://finance.yahoo.com/news/warren-buffett-says-couldve-turned-114-400000-230140222.html

"
First, take yourself back, way back to America’s entry into World War II. Franklin Roosevelt was president and Buffett was a young boy. And as you may know young Buffett, unlike most kids his age interested in games or sports, was basically consumed by the stock market. And at that dark moment in US history, Buffett was ready to take action.

“Let me give you a figure that’ll blow your mind I think. I bought my first stock when I was 11 years old. It was the first quarter of 1942, shortly after Pearl Harbor,” Buffett recalls. “I spent $114.75, [for] shares [of a stock.] $114.75. If I put that $114 into the S&P 500 at that time and reinvested the dividends, think of a figure as to what it…would be worth today,” he asked me?

So, what do think?

$10,000?

$75,000?

I’ll give you some help. That’s way low.

Let’s pick it up with Buffett again: “The answer is about $400,000. So if I as a little kid had taken that 114 bucks I’d saved— shoveling snow (LAUGH) or whatever I’d done, [I’d have] $400,000 today. [In] one person’s lifetime. That’s America. I mean, that isn’t me. You know, it’s the huge tailwind the American economy gives to any equity investor.”

US stocks are doomed for bull run, simple because aside of systemic flows their expected dividends are positive

 

[Scataphagos]

If you're a "half-decent" trader, you can STOMP Buffett's "buy and hold".

Actually, that's NOT a true statement. Buffett had a bet with a hedge fund 10 years ago that buying and holding the index will beat an index of hedge fund managers(supposedly "half-decent" traders or active managers). And the hf manager lost the bet.

It's kind of difficult to beat buy and hold a broad index..

Perhaps Buffett made the bet with a "half-ass" trader instead of a "half-decent" one.

 

[speedo]

Someone with an investor mindset trying to communicate with a trader (speculator) is like a Navajo trying to communicate with a Hindu.

 

[trader99]

Someone with an investor mindset trying to communicate with a trader (speculator) is like a Navajo trying to communicate with a Hindu.

I have both mindsets. I have both a long term account for investing and a short-term account for trading. But I lean toward more trading but I appreciate long term investing via 401K etc.

 

[speedo]

I have both mindsets. I have both a long term account for investing and a short-term account for trading. But I lean toward more trading but I appreciate long term investing via 401K etc.

 

[312]

I have both mindsets. I have both a long term account for investing and a short-term account for trading. But I lean toward more trading but I appreciate long term investing via 401K etc.

Why would one trade in a taxable account (presumably generating taxable short-term capital gains) while keeping buy-and-hold investments (which don't realize capital gains until sold) within a tax-sheltered account?