Warren Buffet is NOT a fund manager

There are many companies which have given fantastic, scorching returns. Microsoft, GE, Berkshire Hathway….are some examples. Berkshire Hathway, well er is a fund..or so you thought. Let me tell you, it is not. Mr. Buffet is a brilliant businessman, fantastic stock picker, (fantastic bargain picker – look at the recent offer to pick good bonds at bargain prices), a great human being, a great philanthrophist, BUT not a fund manager.

He runs a big, huge 800-pound gorilla of an insurance company, where people like Mr. Jain can buy an risk -at the appropriate premium. In fact Mr. Buffet can buy a small stake in a company, can buy more stake, can merge it with Berkshire Hathway – things which a normal fund manager cannot even think of doing.

Berkshire Hathway is a fantastic company with a great 28 year track record. However over the past 2-3 years it has underperformed the index. Yes you read right, it has underperformed the index. How come it is not there in the index – well it is not traded enough, so perhaps the impact cost could be an issue.

So in my finance class if I ask you to name a great fund manager, you will get a zero if you said “Warren Buffet”. However if I asked you to name a great businessman, a great philanthropist, or a great business communicator and you said “WB” you would get a 10/10.

Explore posts in the same categories: Investing Myths Busting

Tags: , , , , ,

You can comment below, or link to this permanent URL from your own site.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: