Why hasn't anyone been able to duplicate Buffett's investing success?

[cantdrv55]

Or maybe someone has and is just keeping quiet.

Seems there are a bunch of books written about the man and his value investing system but I have not heard anyone claim to have gotten super rich off it except for Mr Buffett himself. It seems he has been following a formula since his early days as a fund manager. I think he learned it from one of his professors at Wharton but I can't be sure about that.

Anyway, the man is a genius with numbers, has a very good memory and is a tireless researcher of undervalued stock. There are lots of people like him trying to emulate his methods but I haven't heard of a second coming of Warren. Why is that?

[Joeaksa]

The people who have invested in his stock sure have done well but not as well as he has.

The "Miracle of Omaha" sure has talent. Wish I had bought a couple of shares of his stock way back when...

[Porsche-O-Phile]

Buffet also does it with much bigger positions, so the results are magnified and more sensational from a "raw dollars" perspective.

Nobody pays attention to the guy who makes brilliant plays and gets 50%-a-year annual returns with $1,000 or $5,000 positions. They certainly pay attention to the guy who gets 15-20% a year annual return with $50M or $100M positions.

[legion]

Originally Posted by cantdrv55

Or maybe someone has and is just keeping quiet.

That's the key. I know of a competitor of his that does much better--and doesn't talk to the media about investments.

[onewhippedpuppy]

Ultimately, the guy has a real gift. I wonder if you can fully quantify what he does? He has the ability to spot companies that are undervalued in the market, that is where his talent lies. There's more to it than the numbers.

[kstar]

Here's what a Nobel Laureate thinks about folks like Buffet and Lynch:

When someone questioned him about the long-term record of active investment managers such as Peter Lynch and Warren Buffet, Miller pointed out that it only takes "one big score" to become a hero, that this jackpot run will keep the manager's average high for a number of years. He said the only way to prove that someone has devised a foolproof method for picking stocks is for that person to teach it to others, and see if their pupils can make the same gains. If the students do not reproduce the returns, then the manager's success can't be ascribed to anything more than sheer luck.

About Merton Miller:

Miller received the Nobel Memorial Prize in Economic Sciences in 1990 for his part of the "M&M theorem." Miller and Franco Modigliani, who received the Nobel in 1985, had worked together to establish a method to consistently value a firm. In the end, they found that the market value of a firm is independent of its capital structure - therefore, the proportion of equity and debt that the firm uses to finance its operations does not affect the value of the corporation. This was later modified to account for some of the market's imperfections.

Source: http://www.indexfunds.com/archives/articles/needham_tracy_20000626_modern_finance_founder_mert on_miller_dies.php

Buffet and Lynch are outliers.

FWIW.

Best,

Kurt

[HardDrive]

I've made 20%+ on my BRK.B in the past 12 months.

The man has vision.

3 years ago he as was predicting the dollars down fall and hegded hard against it.

[Wickd89]

Originally Posted by HardDrive

I've made 20%+ on my BRK.B in the past 12 months.

The man has vision.

3 years ago he as was predicting the dollars down fall and hegded hard against it.

Awesome. I was thinking of some stock and getting some BRK B shares.
How did it do in the Q1? Most of my other investments tanked....

Thx

[Don Plumley]

Buffet's annual letter to the shareholders clearly outlines his investing philosophy. And as you read them over the years, he addresses his concerns and owns up to his mistakes.

While he has made great fortunes holding large positions in large companies (think Coke), I'm most impressed by his acquisition strategy. Coming from the position of someone that has been involved in nearly 30 transactions, his approach is a breath of fresh air. He finds well-run companies in basic industries with good management teams and solid fundamentals. He and Charlie Munger typically make a decision to pursue acquiring a company in about 30-60 minutes. After closing a fair deal (it's certainly easy when you have a large checkbook and don't have to burden your acquisition with debt) he let's management run the company. As he states in his annual reports, most of the CEO's that run Berkshire companies have no financial need to work. Through the initial acquisition most become independently wealthy. Yet given an opportunity to run a business judged on their ability to deliver promised results, virtually all have stayed when given the opportunity run a business in this structure. Because they ran a good business before Berkshire acquired them, so the logic goes that they'll run a good business when left to their own devices. This contrasts with typical corporate acquisitions where there is pressure to achieve "synergies" (investment-bank speak for cost-reductions through labor or location consolidation) and/or pay down debt load plus the influx of new managers that "know how to run the business better" more often then not destroy shareholder value.

I find it even more inspiring that he took the lesson of a younger man, Bill Gates, and decided to start transferring his wealth to the Gates Foundation with the stipulation that it be spent quickly - rather than creating his own foundation after his death. The two of them have set a philanthropic example that hopefully many others that have profited from the historic increase in personal wealth over the past few decades will follow.

[TheMentat]

Originally Posted by cantdrv55

It seems he has been following a formula since his early days as a fund manager. I think he learned it from one of his professors at Wharton but I can't be sure about that.

Benjamin Graham and David Dodd are two pioneers of Value investing, and an excellent place to start. Their work is highly regarded by Buffett.

[scottmandue]

I don't know... his first few albums did pretty well but then his popularity seemed to taper off, maybe because he stopped touring.... I do hear his restaurant chain is doing pretty good.

[ronin]

Originally Posted by scottmandue

I don't know... his first few albums did pretty well but then his popularity seemed to taper off, maybe because he stopped touring.... I do hear his restaurant chain is doing pretty good.

o.k. now. I don't care who y'are, but that's funny raht thair

[RWebb]

I can't believe nobody mentioned his insurance business. That is one key factor that lifts him above other outstanding genius value managers.

How do you get money to invest when the market is low??

You don't. But Buffett always has a huge cash flow coming in from the insurance side. So he always has lots of $$ when investors are fleeing and other stocks are low...

That is what hurts others, but the insurance $$ flow buys him immunity at just the right time to buy undervalued stocks.

[kimlangley7]

My 87 year old DAD keeps harping that if he had spent the $5K on Buffetts [stock ]Waltshire -Hathaway??] instead of buying a 1955 Cadallic > we would be $$x,000,000 now zillionaires . I don't think Dad ever forgave himself for his self-indulgence..... He's [Dad] still playing the stock market....

the old 55 caddy did us well in Europe in the 50's.... we toured Europe pretty nice..... monster of a machine