Warren Buffett is considered an extremely successful long-term investor. But for investors who invest their money for considerably shorter periods, Buffetts investment strategy is a flop.
"Oracle of Omaha," Warren Buffett, is undoubtedly one of the most successful investors all the time. As a value investor, he remained faithful to his strategy of investing in undervalued companies and holding stocks for a long time. But look at the performance of Buffet's investment-owned Berkshire Hathaway, the picture gets cracks – especially when looking at short-term investment success.
Berkshire often misses the benchmark index
Michael Crook, who is in charge of the US investment strategy at the Swiss bank, has put together a surprising analysis that shows that Buffett can't beat the market surprisingly often. As CNBC reports, the strategist uses the US S & P 500 index as a benchmark behind which Berkshire Hathaway often hit behind.
Berkshire Hathaway often fails to outperform the benchmark quarterly. Investors looking for short-term investment success and adjusting their deposit frequently and at frequent intervals would not get off to a good start with Buffett's strategy.
Should Buffett be fired?
Would investors be better without Warren Buffett because of this fact? No, says Michael Crook. In the long term, Buffett has the right: 350 percent of outperformance was achieved by the star investment throughout the period considered, according to UBS expert.
The expert explains: "The high long-term returns Berkshire Hathaway has demanded patience for long periods of underperformance. My conclusion: Most investors would probably sell Warren Buffett too quickly if they were over 1 -5 years have not performed (eg Some shares, asset classes and / or managers) ".
The investment environment has changed
But it financial markets has changed over the past few years – risk aversion has made room for the desire for rapid pricing – a field where Warren Buffett's Value Strategy is unlikely to succeed. Whether it as a career begins with its strategy in today's market environment will still be as much investor confidence is questionable. Because Buffett can look back on a long track record, many investment managers are faced with investors with the demand for fast and short-term price gains.
Warren Buffett himself has always emphasized the importance of patience for investment success: many of Berkshire Hathaway's attitudes have been with the billionaire for several years. Recently, Buffett – along with JPMorgan CEO Jamie Dimon – had publicly demanded that listed companies no longer have to submit quarterly forecasts in the future. The short-term forecasts would have negative consequences and damage the economy the two economic variables had explained. High pressure has already claimed some victims among companies.
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