Tuesday, January 1, 2013

Break Your Own Rules

Looking for some inspiration on this First day of 2013 and came across this docmentary posted by another blogger ASSI. Warren Buffett made his Billions without a computer nor a calculator, sit in his office reading whole day, yet make consistent returns of 20% since 1965.

Is it easy to make 20% a year?  It's possible.  How many can be consistent year after year?  Probably only the top 1% of the traders can do it. What make Warren great?   It's the size of the funds he managed.

Warren is a investor, not a speculator or a trader like what most of us call ourselves, and admit it, for those 90% who are losing money, you are simply just a gambler!

What's the risk to make that 20% return a year?  Warren buy into a bussiness and own part of the businness with no leveraging and tell us not to get into debt.  He hold onto his investments for years.  He considers Derivatives trading as weapons of mass destruction.  He buys into value and his risk is low compared to traders like us.

We may not be able to follow what he is doing because we don't have the resources, we can't compare ourselves to Warren but we can learn from him. He want us to think independently, to allocate Capital efficiently and sometimes just have to break our own rules.

For that, I am going to try for 20% return this year, but I must admit my risk is definitely very much higher.