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Author: stayput One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 213573  
Subject: Road Map To Peace Of Mind Date: 7/1/1999 11:00 AM
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Free advice to those (myself included) troubled by Berkshire Hathaway's awful reception in the marketplace over the last 15 months.

It's o.k. to be weary. Hold this puppy if you believe
past records are any precursor to future performance,
and don't expect more than half a CD yield as return
for the rest of '99 (about 2.5 percent). If the stock's price performs better than that, be pleasantly surprised.

With modest expectations you won't be disappointed.
And you'll be holding the stock (recommend only 10 percent of a portfolio, max) for future growth expectations, largely because of a willingness to pay for access to Buffett's mind.

If you're too weary to hold it with such conservative
expectations, sounds good, too. Try something else for
long-term growth. Or have some fun with a little "toy" money you can afford to lose. Being active is important now for those in Berkshire who are tired and worn out (again, myself included).

Buffett himself bought silver, probably even Allied, to keep his mind and hand active. He doesn't like sitting at the plate with his bat on his shoulder for weeks and months any more than you do, and is probably weary of this waiting too. He's very competitive.

In the meantime, as someone who respects Buffett's achievements enough to have invested a ton (in our little lives) with him, but who is NOT an idolator, I can still, clear-eyed, urge you newbies (and oldbies) not to beat up on the convenient target, Mr. Buffett.

Inexperienced people still revved from Lowenstein's book and fawning news coverage bid the stock up 80 percent in three-and-a-half months in '98. It clearly couldn't sustain this gain during the year, and onward into this year, when the realities of quarterly results set in, in part effected by the hits on his holdings, in part by the pricing duress in the insurance business, in part because of the tens of thousands of new shareholders who inherited the stock through GenRe, in part because of the cash Buffett piled up, in large part because of his discipline.

Don't be hard on somebody for not abandoning his discipline. It works for him, for our better or worse depending on our profiles and values as investors. You wouldn't abandon the way you lead your life, if it has worked for you, simply because what you do and believe doesn't always resonate with those around you all the time.

But as frustrated investors, be proud of your frustration. It's a good sign there's a pulse beating in your head and you expect something in return for your risk. I just suggest you use this flat period to examine how you're invested, why you have the plan you do, your time frame and risk tolerance, and make any
course adjustments necessary. If that means dumping Berk, so be it. It's essential to understand and really believe in what you own. If it means holding it, have a decent reason that gives the stock a chance to generate an average annualized return over a few years.

But don't waste your precious time and energy getting mad. That's emotion you could better spend picking a stock you believe in more. As Buffett has said several times recently, there's a law of natural selection among all shareholders of any stock, all the time, and it can take awhile for people to figure,
and refigure what they're doing. It's just human nature (reason and emotion duking it out).

Best regards.
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