Turning His Back on Value
Although Warren Buffett is one of the investors widely credited with popularizing long-term value
investing, in point of fact he has long since abandoned that approach. "Here's the thing, Kent … I
just got tired of waiting. Do you know how long it takes to make money from holding undervalued
stocks?"
Apparently academic research played a significant role in Buffett's change of heart. Many
academics have written papers that demonstrate that there is no system that can reliably beat the
market, and that market-beating investors are just a statistical anomaly. This view has perhaps
been best expressed in Burton Malkiel's book "A Random Walk Down Wall Street".
"See, Kent? I read these papers and these books and they made a really impressive case that it
was just impossible to consistently beat the markets. They had a lot of stats and cool charts and
everything. So, I looked at the billions and billions of dollars that I had, and the hundreds of
thousands of dollar that they had, and decided that they must know something I didn't. So, I
decided to abandon long-term value investing".
When asked if he had any plans to continue investing, the famous Omaha investor was
practically ebullient. "Day trading, baby! It's exciting and these sites make it so easy. I mean, I just
log on to read the news and there's a "Trade" button everywhere I look. And when I trade, it makes
this cool sound … like the machine is happy. And if I trade a thousand times this month? I'll get to
be in their Super-Duper Special Trader Club, and that will give me access to these software
packages that I could just go out and buy for $100".
Making Dollars Out Of Pennies
Instead of buying giant boring companies and holding for decades, Buffett has thrown his lot in
with the penny stocks. After all, those efficient market hypothesizers that proved that it's
impossible to beat the market have based their case largely on information - the idea being that
all that can be known about a big company is already known, but that it might be possible for
lesser-known companies to have some outperformance potential. Not only that - at just pennies
a share an investor can own hundreds of thousands of shares at a time.
On top of that, Buffett has discovered that there are some truly amazing opportunities in penny
stocks. "Yeah, this one company? They're going to cure cancer. I called the CEO and he told me
so himself. I did some research afterwards on Google and I didn't see any articles about it in
Science or Nature, but the CEO assured me that those journals are just fronts for the hedge fund
industry and his company had to keep all of the really interesting information to themselves or the
pharmaco-industrial-media-complex would steal it all."
"Oh, and this other company? They know how to change your car's engine to run on water. And
there's one here that can clean up pollution. And then there are these China companies. I don't
really know what they do, but they're Chinese, so that has to work right? I mean, I know they don't
have any auditors and they're actually headquartered in the Caymans, but I'm sure it's all fine. I
mean, it's China!"
Day Trading - The Real Secret to Wealth?
Buffett has also apparently turned to day trading to supplement his income. Apparently, dozens of
helpful millionaires log on to message boards every day just to help investors like him make
more money. "Yeah, Kent, it's really cool. I read about all this money that people were making,
and these systems that could double or triple my money in just a couple of weeks. So, I had to
check it out, right?"
"Once I got to doing research online, it really just changed my life. There will all these guys talking
about how they doubled their money in just a week and all I had to do was follow their picks and I
could do the same. How awesome is that? I mean, I know there are all those newsletters out
there that promise to double my money, but they charge money. And hey, I'm Warren-freaking-
Buffett. I don't spend money if I don't have to, right? And besides, it's the internet … it must be true,
right? I mean, I'm a billionaire and I never give any of my ideas away a minute sooner than I have
to, but there's all of these rich people online just waiting to help you!".
On The Markets and Corporate Strategy
Buffett was not just going to talk about his new investment strategies. He also wanted to offer a
few thoughts on the markets themselves and corporate policies. "Here's the thing … I know the
market is rigged, but that's actually a good thing. I mean, I've never once lost money because I
made any kind of mistake - it was just a conspiracy by shorts and journalists to bring down the
stocks and hurt innocent investors like me. Once we stop them from exposing the problems
these companies have and raising any kind of doubts whatsoever, all of those stocks will go right
back up".
Turning to acquisitions, Buffett questioned why all of these companies are so active in mergers
and acquisitions. "I don't see why these companies keep buying and selling these units. I mean,
they're just enriching the bankers and amusing themselves, right?"
"I know I used to do deals, but I've sworn off of them now". When asked why he would stop such a
successful strategy, he answered, "well, it's those academics again. I read some papers that
said that deals don't add value and the markets are always efficient … so any sort of deal done at
any premium has to be a bad move. Who was I going to believe? My own track record of value-
building deals or a paper written by an academic who never had to meet a payroll in his life?"
The Bottom Line
To say the least, Buffett's newfound market wisdom is intriguing. After years of building incredible
wealth with a very well-described and consistent strategy, Buffett has decided to believe those
who lack the patience or ability to replicate the strategy and assert that it therefore cannot work.
Likewise, this famous investor's embrace of modern investment strategies like day trading and
penny stocks is sure to force a reevaluation of these neglected sectors.
Happy April Fool's Day from Financial Edge! This article was written for fun, and was not intended
to offend or misinform

i was like, WTF!!!! yani my dividend strategy was hot air.

Unajua vile guyz have their 'to die for counters', like u witj your kcb, hisa and guru with their jubilee, Sm with his kk, qw............ am not sure what he has. Mine is KENG.ord. And am going to get as much as i can below 16.00/= hadi they make me a board member.
Not much capital gains there for now(may be a conservative 20 bob by end year ) but dividend should keep me warm till 2013 when it will start making major head way.

guyz, for a quick buck, i would advice, sell me all your kengen shares, no use waiting 2 years while you can speculate on kq and sameer. cheers

GUYS IT WAS AN APRIL FOOLS THING

Damn, sounded like "WB jumps out of his skin"

Seems like its not Qw who should be following u but me. Made a debut in stocks with kengen IPO, traded HF, Carbacid etc. But for me then it was purely speculative, been out of it for sometime now. I guess its time to come back and build a serious portfolio. I'll be looking at what u guys are picking and other under-valued jewels in these depressed times.

@Ceinz..most welcome as long as u pay ur elec. bill promptly or in advance

I knew it was a hoax way before I got to the middle part. But nice try!!!!!