Take heed of the ‘Oracle of Omaha’

Is Warren Buffett the exception which proves the rule? Dr Benjamin Holdsworth on how hard it is to beat the market.

If you were asked who you thought was the world’s best investor, you might well say Warren Buffett, the chairman and chief executive of Berkshire Hath­away. 

That would not be an unreasonable answer, given he is worth around $71.5bn, give or take a few million for daily market movements.

He is also often held up by those in support of ‘market-beating’ strategies as a shining example of their creed. More than 40,000 avid followers attended the 2018 annual shareholders’ meeting, referred to by some as ‘Woodstock for capitalists’ and his style of investing is known as ‘Buffett­ology’, on which numerous books and articles have been penned. 

To us, Buffett is the exception that proves the rule. Although he – via Berkshire Hathaway – owns a concentrated pool of hand-picked companies, he has several traits in common with a more systematic approach, such as an infallible belief in the power of capitalism to create wealth over time, which requires discipline, patience and fortitude to capture.  

He is comfortable being different to the market; famously, he avoided tech stocks in the late 1990s because he did not ‘get’ them. He also detests fund management costs that detract from market returns.