In his 1996 shareholder letter, Warren Buffett wrote about the underperformance of active investing. According to Buffett, he believed that he is an intelligent investor because he has the patience to be inactive. While most managers and asset allocators are trading their winners because it has gone up a lot or because it has become too large of a portion of the fund, Buffett simply holds and lets his winners ride.
The analogy that Buffett used was one from basketball. From Buffett:
To suggest that this investor should sell off portions of his most successful investments simply because they have come to dominate his portfolio is akin to suggesting that the Bulls trade Michael Jordan because he has become so important to the team.
It seems that Cathie Wood is falling prey to this exact problem. She is selling her winner in $TSLA to buy other beaten down stocks because they have some form of innovation or potential that the market is currently missing. This approach works…until it doesn’t.
Happy New Year to All!
- Stanford business study shows bank values are actually $2trillion lower than book value
- Fifty More US Banks on the Verge of Failing
- Putin Announces Agreement for the Yuan to Become the New Global Reserve Currency
- Incredibly Good Article in The Economist About the Banking Crisis
- Are They Actually Trying To Crash The Economy On Purpose?
- UBS may bail out of the Credit Suisse deal, too many issues.
- UKRAINE WAR ENDING?
- To the moon! The interest payments of the US Government as old debt is rolled into new one.
- The UN Moves to Take Control of ALL Water
- Elon Musk responds to Biden’s bullshit nationalization of land in Texas