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Feedback re: Buffett Article

Our recent Warren Buffett article caused one man to lose it (and not understand). He is a great example of a follower and ultimately a market loser:

Why not get some men back into your organization? Today’s comments on Buffett are typical. Farmer: Gee whiskers and willikers, the sun certainly is good for crops, you may want to look into it. Little girls at TurtleTrader: Oh, so HOW much sun should we use? What TIME of day should we use it? Get a f**king life, girls. Or do your own research. You want WB to tell you everything? What a bunch of a**holes. And, why would you even want to ask ANYone else how much you should buy, how long you should hold it, and when you should sell? What a crying bunch of investment newbies you girls are. Start thinking for yourself for a change.

Here is the article that caused his ramblings. The writer above misses the point. Buffett is acting no different than any other stock tipster.

Positive Feedback

Some feedback from reader, Dr Alek M.:

I thought I would take the opportunity to say thanks for the course, the support and the site. Everything I have read (and continue reading), makes absolute sense to me. I am a dentist, who decided a few years back that there is more to life than dentistry. I started reading and studying about investment and speculation until I became completely absorbed by the whole field, to the extent that I hardly think about anything else. I was looking for a methodology of trading when I stumbled upon…the site. The moment I started reading, I knew that I had found my method. I have gone through the course…and I hope to start paper trading within the next couple of weeks. Thanks very much again.

Retirement Plan Wake Up Call

Another reader wrote in asking:

I am currently an employee with the State of California and have the ability to start setting aside trading capital in a 457 plan with Charles Schwab at the rate of $1000 per month. My concern is that although the tax benefit is huge, I will not be able to do any short selling or trade anything that is not on a cash up front basis. For options trading I am restricted to writing covered calls and buying puts against long positions. Since the putting $1000 a month into a self directed retirement plan cuts my taxable income almost in half, it seems pretty great, but if the restrictions force me into a long-term buy and hold investment strategy…My basic question is this: Can I effectively trend follow with these restrictions and if so, how much will I be hampered by not being able to short sell on a margin account. Would I be better off just paying the taxes and putting the money into a margin account with a discount broker?

A tax benefit that severely restricts the way one can trade or make money is no benefit. This gentleman is right. The government, with their great benefit, is forcing a buy and hold strategy. He would be better off without this retirement plan.

Cramer’s Troubles Could Get Worse

This excerpt of manipulation taken out of Forbes should not surprise. It is another reason to never trust fundamental analysis:

The transcript includes some eyebrow-raising anecdotes relating to Cramer’s cozy relationship with CNBC television personalities Maria Bartiromo, David Faber and Mark Haines. Since leaving his hedge fund, Cramer has joined the network as co-host of the nightly CNBC yakfest, America Now. He also frequently cavorts with Haines and Faber on its morning show, Squawk Box. In some instances, according to the taped interview, Cramer would call the anchors with a possible news lead on a company after he had already established a position in that firm. Says the trader in the taped interview: Before he’d call Maria maybe we’d buy five or ten thousand shares of something. You know, the name that he was about to mention. He would position the firm so that when it did come out, it would be the positive or negative short or long, depending on, you know, what information he gave. The CNBC relationship allegedly worked both ways, with Cramer making trades based on information he gleaned from the on-air talent. One tale that came up during the trader’s interview with assistant U.S. attorneys involved profit made on Salomon Inc. just before an announcement that the investment bank was being bought by Travelers Group in September 1997. The trader recalls Cramer saying, That’s one for Faber. A CNBC spokeswoman denies any wrongdoing and says the network has not been contacted by any legal authorities and has no knowledge of any investigation into the network or its anchors’ actions. CNBC has the highest journalistic standards in the business. David Faber, Maria Bartiromo and Mark Haines have the utmost integrity and any allegations otherwise are completely without merit, says Amy Zelvin.

Kernen and Faber

Analysts are useless. But what choice does CNBC have? If they don’t promote analysts, the house of cards they have built implodes. So they continue the charade:

Kernen: I haven’t read a lot of it, but every company releases these. You can’t read them all, right? You need to be pointed to something by someone who… That’s why analysts…
Faber: It is hard.
Kernen: As much as we disparage analysts…
Faber: We need em.
Kernen: …they need to cover their area. And they may not be good at buy and sell and they may hold stocks too long, which, believe me is easy to do… Like a whirl com, you got it at 40, at 20. Do you put the sell at 15 when it looks like it can’t go over (unint.)? Is that when you pull the plug. Then it finally gets to six. In hindsight, it’s easy to look back and say, What an idiot these analysts are!.
Faber: That’s true.
Kernen: But it’s… Try it some time.
Faber: And we do a lot.


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