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Stocks B / Berkshire Hathaway


Subject:  Re: Stock Picking Getting Harder Date:  11/26/2017  7:41 PM
Author:  commoncents33 Number:  232873 of 250437

Information is everywhere, too. You can't beat insiders. They know it all. We little guy stock pickers cannot beat the next echelon behind insiders, the money manager stock pickers who know nearly all there is to know about particular companies. It is what they do day in and day out.

For the small fry, the best way to win is to play a different game they're not playing.

The thing both of the above (generally) have in common is a short time horizon. Particularly money managers: all but the highest-reputation (think Seth Klarman or Buffett) have to constantly fear that if they have several quarters of underperformance, they will face fund redemptions (less AUM fees)...or worse, will lose their job.

Yet an individual investor is at liberty to have fairly long periods of relative underperformance, as long as the long-term results are attractive and as long as the finances are arranged to weather the occasional storm. So looking for businesses with great long-term prospects yet short-term difficulties or uncertainties may be one of the more fruitful pastures.

Also, those "money managers" aren't immune from group-think (as a group), so if one can stand apart from that, even the most well-known stocks out there can offer great prospects. In early 2013 and again in early 2016 Apple--the largest business in the world at both points--was absurdly cheap (less than 10X free cash flow in 2016...with about 30% of share price represented by net cash)...despite "information being everywhere". Or take Berkshire in early 2016...the poor individual investor could grab that at 1.25X BV...and take a full position in one click of the mouse. No need to pity the small individual investor...even one--like myself--who prefers to invest in very large cap and very well known businesses (contra TransverseSlice, I don't have the confidence to commit large percentages of my money to businesses that don't have conference calls and no one follows...I feel more comfortable reading tons of opinions on businesses, then making my judgment based on that info. I've find sound reasoning is easier to recognize than produce...though I suspect the latter in qualified hands is more profitable).
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