Thursday, November 1, 2012

Buffett's miserable performance in last 3 years

No one invests in a 3 to 5 years timeline. However, we change strategy in 3 to 5 years (actually I change far more often esp. when there is a reason to).

Buffett did not perform in last 3 to 5 years. Do you remember Fidelity's Magellan Fund? It was great for a while and I invested in it riding the wagon. Then it did not perform due to it was getting too big (and the fund manager knew the problem and he quit to save his glory). I moved all my Magellan holding to other fund and spared me the non performance of years to come.

Many fellow investors did not abandon the Titanic for the following reasons: 1. They believe it will come back (and they never did), and 2. Try to save the huge capital gain tax if they have it in a taxable account. The result is losing opportunity to make money by switching to other funds.

The rear mirror is always clearer. However, if you do not learn from history, history will repeat itself. Do you think Buffett's funds will appreciate for sure? No one can predict the outcome correctly and consistently. To me, there are more problems down the road like who will lead the group....

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