When I say consistent, it means proven track record that runs in decades. That means more than 10 years preferably. I do not and have not actually perform comparison and calculation in months, not till luqman kinda broke the news that it is quite common for a trader in KLSE to earn 5% a month emphasied in bold here to me. I was surprised as this is news to me.
Then, he goes further to tell me it is on an AVERAGE, which is an even bigger news to me. I simply extrapolate the graph to project the earnings in annums, my eyes pop out.
And to answer your question, yes, Mr Buffet is consistent, and that is the prime reason for his success today. He did nothing but grow his funds by about 15-20% per annum on a compounded basis since the inception of his holding company, Berkshire Hathaway. It should be noted that it used to be a failing textile manufacturing company which has in the course of business switch to insurance business. It has and still is till today remain as his main business. His company does not come under the category of a "holding" company although it generally is but it is categorised as "reinsurance" or "insurance" couldn't remember precisely. Anyway, he has significant presence in both the market.
Yes it is true that market forces are determine by supply and demand and abitrage takes place when market is not in equilabrium. We have plenty of theory to support and argue with this notion alone. I will say nothimg much on this.
However, as I approach the topic on investing (note not speculating), I look at the ways of TA or using charts, so called Fundamental Analysis and finally I found the Warren Buffet-like appraoch or rather, investing in share market just like how you invest in a business appraoch.
First of all, I thought, hey just maybe by using sophiscated technique coupled by charts, I may be able to make abritrage gain from the market. Note that isn't TA using pass share price movement to predict future price movement? Note that the share price is determined by supply and demand so why must it follow a certain trend? But I guess people tend to think that using TA gives you confidence in analysing the psychology of the market, whether it is bullish or bearish.
And to this, I only have one answer, that, Warren Buffet under such circumstances has profited alot from this people using his investing appraoch. If people were to rely on charts, in a bullish market, people will be likely to buy overpriced shares since the volume is heavy and appreciation is taking place, hey, it's a good sign in the chart isn't it. Benjamin Graham calls this over optimistic. Mr Buffet mainly profits from the other way round, Graham called it unjustified pessimism.
This is when the market comes under heavy selling pressure, don't you agree that in a bear market, TA indicator will be bad and most likely point to a psychology that the counter/security is during badly, hence don't buy. So it will tend to fall below it's "fair/intrinsic" price.
Mr Buffet profits directly from this people. So, eventhough people like to say that they use charts to provide them with a better overall view on the psychology of the market so that they will not let their emotion to get the better of them, they still get profited by people like Buffet.
I think dreamer makes a very good statement before, you make your gain not because of selling but buying the share. It is really in a way very consistent with Buffet and is a sound investing principle. Buffet gets to where he is today initially by getting bargain hunts, shares that suddenly plunge below it's "intrinsic value" due to current/short term circumstances.
However, the main thing that seperates all of us from the likes of him is not because of investing technique, in fact, I believe he doesn't use complicated formulas to appraise his investment, he places more importance on non-financial information too. It is his ability to understand market movement, provide valuation to securities so forth that beats all of us, allocate capital, understand business, etc.
I find no other approach to be as convincing as his. The only problem is whether you have that "circle of competence". He does not care about share prices. He has till today almost never sell any of the shares he bought. He only increases it.
Haha, but that quote does not originate from him, it was his teacher.
Anyway, I'm not pro Buffet, I just find his method more logical and sensible.