First of all let me note that a few years ago an university professor looked into Buffett history and found that according to filings he had a turnover of 100% (correct if I'm wrong he only checked the 13F they do not show other investment than stocks and stocks that have been held not long enough to be filed). Also he held 80% of stocks for less than 2 years.
Here is what the chart for a stock looks on a daily chart:
Absolutely disgusting. Giant candles, tiny candles, huge gaps, no trend, no pattern, valuation doesn't matter, government doesn't matter, etc. Looks like gambling or trolling. Without dumb money hedge funds are not performing, and quants either they're only as big as the retail market is (both day gamblers & baghodlers).
Versus a chart over 25 years...
Some thinking can actually take place as opposed to the 1Y chart that is just ridiculous. Is it a good company? Is it expensive? The trend? And so on.
The long term advocates do seem to mix everything up and throw Forex in there (because comparing 2 economies is the same as buying a company). "Buy and hold is the only proven way bla bla bla everything else is bolocks" yawn I get it you're braindead. Man these investment advisors.
2Y chart of FX (and 1Y) looks much better than a long term one, as opposed to 1/2Y stock charts being disgusting but 20Y looking exploitable.
Let's take a look at some of his purchases. The stocks that went against him and he closed rapidly do not attract any attention so there is nothing on it and I did not want to go over his 13F for hours, most of his trades recently are breakeven or small wins anyway from what I have seen. So we are starting with some of those ones.
Buffett Phillips adventure
Berkshire Verizon adventure
And I don't even know why he held that long, maybe there was nothing else around. Idk it just wouldn't go up, looks bad already just a few months after BRK bought. Who knows what other positions they had at the time (shorts are not reported)?
A quick win
Watch out all bagholders are now learning from his "mistakes" and making sure they never sell too early their bags, of course they also know diversification is for idiots and they should make sure to hold as little company lottery tickets as possible, making sure to: - Have very big stakes - Never sell (knowing that 97% companies go to zero and 90% of the remaining 3% perform worse than inflation)
Maximizing as much as possible their odds of losing everything while freezing their capital and minimizing their odds of taking advantage of opportunities 👍
The herd blindly following Berkshire and all institutional investors feeling "safe" to buy companies after Buffett bought (if their clients complain they say he did it so...) = perhaps this allows BRK to have a high hitrate since they are famous?
Of course no one follows them after they sell, there is always a good excuse to hold a bag.
If Warren/Berkshire countless small wins & breakevens are hard to find, many losers are impossible to find, his winners sure are extremely easy to find actually they are even impossible to miss as they are constantly thrown in our faces endlessly.
A famous one
Another famous one
And of course... :)
The only loser I heard of, of course the one he just kept holding, a source of inspiration for success & motivation coaches and all dum dums that dream of lambos
Hundreds of losses or struggling winners he cut off quickly? Who cares! They don't exist lalala I cannot hear! OMG say what? He held a bag with red candles? OMG long term just noise bla bla bla IQ doesn't mean anything strong hand to victory! "Buy cheap". If it's worthless crap then it is expensive not cheap... 20 cents for a bag of soiled toilet paper is not cheap even if it is 20c...
Some stories
The Coca Cola chart over 2 decades when he bought:
And then...
In 2007 Buffett got into Forex a bit and bought the Brazilian real He said something like "we can't get a big position like we could with the euro". Nice, Brazil is too small for Berkshire.
Forex gets so much bad reputation from ignorant clowns, if dumb money is doing better with stocks (the number of baghodlers would suggest they are not) it would simply be because they are perma bulls in a big long term 50 years or more bull market.
Forex is not super long term like this, so mistakes will kill the noobs much faster. Holding a stock bag will take years or decades to wipe out its investors, but in the end they are just as bad and just as rekt. Forex IS shorter term, it is not gambling or less valid because it is shorter term, no, we are talking about a different asset that works in different ways, and since it is shorter term clowns and bagholders will be wiped out much more quickly.
The leverage is not "what makes Forex so dangerous", the issue with noobs is not the leverage it is being bad, and fighting trends and bagholding. Since they hold losers until being wiped out, it will be much faster with FX than with stocks or Bitcoin. Bitcoin baghodlers have been at it for 3 years and are still alive. If they held FX going against them they'd be rekt long ago.
Oh and then since FX is not being sold as a magical holy grail to hold passively "any idiot can make it" and brokers spend millions to advertise day trading, the noobs all end up being day gamblers even thought zero professionals do it, and day gambling is the fastest route to rekt. High costs, high randomness, not holding winners, oh and the majority of gamblers dumb enough to day gamble obviously do not have the mental abilities to figure out 2% risk per trade day gambling is simply dense because your actual risk will be something like what? 50% over 1 month? As opposed to 5% over a month using 2% risk with a logical strategy. They just go for x% no matter the risk over time like it doesn't even exist which makes absolutely no sense. And they think the risk is the same...
Forex investors don't get as far as I am concerned the winrate stock investors get, with the exception of retail forex gamblers which trade profit for winrate ye pretty easy to have a high winrate if you don't care how much you lose, and another exception perhaps would be when Buffett trades it because he goes for a solid unbreakable multi year trend and very rarely. Lower winrate buuuut (obviously there is a but otherwise why even touch FX?) more opportunities. So you can actually have less portfolio noise you won't be down 20% the year the S&P goes down.
In the end it all ends up the same way. The best FX investors over decades got returns of 30% a year, the best stock investors over decades got returns of 30% a year. "Experts", investment advisors, nobel prize economists with plenty of degrees (aka clueless idiots), they're going to tout bagholding index funds as the holy grail, beg baggies to never sell because "just noise - last time they said - 13% muh snp - buffett long term", and constantly bash fx & even commodities, and most people are brainwashed to listen, they just fall for the most obvious bs just look at how many people cry when some vegan activists "show terrible images" of a farm that are obviously made up (they could wait for a farmer to have an accident then go visit his abandoned farm a few days later when animals died and feces accumulated and at night then go "see those horrible conditions? They just die and are left for dead and there are feces everywhere and animals are abandoned in the dark").
No free lunch. No holy grail. No market that throws free money because "muh positive sum". Markets are chosen by personal preference (and a bit by what is volatile at a specific moment of course but over decades they all have something to offer). Let me tell you one thing: commodities & forex have hedgers. Therefore it is a positive sum game for speculators in my eyes. Whereas stocks? Only investors trying to make money ripping each other off. This is the real zero sum pyramid scheme.
Warren looks for winners, trends & supply demand imbalance just like anyone else. The time horizons are different, the reports you read are different (shareholder letters or central bank minutes or the OPEC MOMR), the winrates are different (and number of opportunities which evens it out), but the way you approach it and the fundamental idea are really the same (trend, new highs, overextended trends like petrochina that went down shortly after Buffett sold, pullback = discount that is a free cheap entry, position sizing, trailing, big winners often being those that rapidly and strongly went your way and losers being those that chopped around for a long time ...). Damn. Warren Buffett is not a wizard that magically picks up winning stocks but does what investors have been doing for possibly millenias.
FX meh trades will last days or weeks, stocks 1 to 4 years maybe. Forex winners last weeks or even months, stocks 5 years to decades. Why would you sell a stock winner that keeps going up? Only if you think it is very expensive (or you hate making money), but if it is already expensive after just 1 or 2 years then you clearly messed up by entering a trade on a stock that was expensive!
Either way you are in for the long run, it is something to make a multi decade career out of, sorry roulette day traders & passive bagholders, taking dozens of trades over a year that will last a few weeks or just a few like Buffett that will last a few years. Learning takes a long time, researching takes a long time, growing an account takes a long time, just the same no matter the market no matter the strategy. The only free lunches are really only found with insider trading... They end up getting lots of free lunches in jail... free hugs too.
cant really talk about trades made 50 years ago the market was very different then.
today its all just about stimulus/fed/pumping . the notion of free capitalism/efficient markets is basically gone. its a different game these days.
citadel, high speed trading and algorithms didn't exist. thats what your seeing in those weird short term movements.
warren buffet is so rich because of his crony connections to government as well as his reputation which gives him access to any ceo or individual he wants and the data he gets from his monopoly investments in the us economy such as his railroad which gives him insight into economic movements. he has massive advantages against any other random investor. he wouldnt make any money these days if he invested like he did in his early days the game is too competitive now.
trading forex on margin is just incredibly stupid. you are being played by the brokers and algo's. your data is being sold and used against you (there are no free trades)
i would say you have a 1% chance of not losing all your money doing that
MrRenev
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@richter711, Who would they sell my data to? Banks? Market makers? That already see order flow? "The market is a different" is an excuse used by losing fools and also what gamblers say every single time. And every single time they are wrong. The central banks force people to use leverage (zero or negative rates) and they force people to buy stocks (nowhere else to put money) gee I wonder what could go wrong? Every. Single. Time.
The only way stocks don't crash is if the bankers crash the currency and this will result in even more bolshevik revolutionaries looting burning and murdering in the streets.
He made 400% in 4 years with apple which is a huge part of his holdings... How is the game harder? There is a wave of dumb money fighting to buy higher & day trading. In 2020 the retail volume went from 10% or something to maybe 30%. I don't believe in crazy conspiracy theories that make no sense. We literally can see what he does every quarter.
@LotusTrading20, Ye. And same as saying the entire economy is a zero sum game "they took a bigger piece of the pie we demand a fair redistribution" like the pie is the same today as it was in caveman times. Like any exchange rather than be a deal between 2 parties is 1 scamming the other.
Retail_Insider
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A nice post, really worth appreciating.
There's one thing:
Regarding "Buying and Holding is the best strategy" ->
I personally believe the game is to be early in the game, even before the real trend begins.
It comes through research, conviction and your own belief system :)
Rest of the retail traders buy based on this narrative and form the late majority in the trend.
Correct me if I'm wrong.
MrRenev
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@Bee_a_Trader, They are going to learn a valuable lesson in the next 10 years. No matter the timeframe or asset it sort of always is the same story. Cannot fight the laws of the universe.
Tahawe
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Thumbs up for the effort! Really? That sounds like a blunder. Did you get recently whacked in the head or in the wallet?
elevatedinvestor
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Lol at the headline. It's a negative sum game. One person can make $10 and the other lose $10 on the other side...but when you factor in the -$1 commission they each pay, one trader made $9 and one lost $11.
Appreciate the time and effort behind this post. It's got great education, it's humorous, and accurate. Thanks for sharing lol.
today its all just about stimulus/fed/pumping . the notion of free capitalism/efficient markets is basically gone. its a different game these days.
citadel, high speed trading and algorithms didn't exist. thats what your seeing in those weird short term movements.
warren buffet is so rich because of his crony connections to government as well as his reputation which gives him access to any ceo or individual he wants and the data he gets from his monopoly investments in the us economy such as his railroad which gives him insight into economic movements. he has massive advantages against any other random investor. he wouldnt make any money these days if he invested like he did in his early days the game is too competitive now.
trading forex on margin is just incredibly stupid. you are being played by the brokers and algo's. your data is being sold and used against you (there are no free trades)
i would say you have a 1% chance of not losing all your money doing that