Friday, April 1, 2011

FinancialEdge: Buffet: Penny Stocks, Day Trading My Real Key To Wealth

In an interview that is sure to shake the pillars of Wall Street, billionaire investor Warren Buffett revealed to our crack reporter Kent Baleevit that he actually made his wealth from risky penny stocks and day trading. "C'mon, Kent ... long term value investing? Who has time for that crap? I'm an old man ... I need to make my money quick and get to the casino before the lines at the early-bird buffet get too long."

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".


Please click below for the full piece:
http://financialedge.investopedia.com/financial-edge/0411/Buffett-Penny-Stocks-Day-Trading-Are-My-Real-Key-To-Wealth.aspx

(Please note that this is an April Fool's Day piece)

2 comments:

Anonymous said...

Yeah, as the pre-April 1st Warren Buffet might have said, if anyone REALLY had a can't-miss penny stock or sure-fire day trading method, they'd be using it themselves to make billions instead of trying to sell it to me. Thank heavens he's finally wised up. BTW, how does he feel about that new Chinese IPO, Quik-poo or something?

Stephen Simpson said...

He's probably about as pleased with that as he is w/ Sokol going on to start a new business (Screwum, Bilkem, & Runoff)