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Is there anyone who had beaten Mr. Warren Buffett?

Is there anyone who had beaten Mr. Warren Buffett?


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Published by Johnson K. Gao
A young investor's experience of his successful trading in the bad year 2008. He did not follow Warren Buffett model (who had a huge loss in 2008) but, a young man had got a very high percentage of gain in 2008 while the market was down. If that means the young man had beaten the sage of stock trading?
A young investor's experience of his successful trading in the bad year 2008. He did not follow Warren Buffett model (who had a huge loss in 2008) but, a young man had got a very high percentage of gain in 2008 while the market was down. If that means the young man had beaten the sage of stock trading?

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Published by: Johnson K. Gao on Mar 25, 2009
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The outstanding performance of a young investor Vs.

Warren Buffett’s sad return in 2008
Emanon 3/23/09 The year of 2008 was a bad year for most of good investors due to the financial tsunami. I heard that the average mutual fund management loss was about 30% or even worse. It was also terrible bad for the Sage of Omaha -Warrant Buffett. He had got an estimated net worth of $62.0 billion plummeting to $37 billion in early 2009 (refer to a URL at http://en.wikipedia.org/wiki/Warren_Buffett). That might be an historical loss to him, which was nearly a negative 49% operation. To a sage in investment that figure might be a shame in contrast to his glory in the past. It had raised a question if the investment model of Warrant Buffett was out of date in the computer era? However, in the contrast and to my astonishment, I had got to know a young successful trader Mr. R, who had got his investment return about a 39% of gain in the last 2008 to the early 2009. Mr. R had been a computer software engineer and who was laid off last year. He had used his saving plus the money that he received from his layoff package to trade stock and option. I don’t know exactly how large it was his total capital invested. But, if his return rate was true and convincible, the 39% of gain shall be considered as a super successful case. His yield was about $3,900 for every $10,000 of his money invested. For curious reason, I made a rough estimation. That equals approximately 88% superior to what Mr. Warren Buffett’s performance [(+39%) - (49%)]. It was almost unbelievable to me, since it was happened in such a turmoil days and the Dow Jones industrial average was sliding downward so sharply. I asked that young man, how can he get such a good performance? His answer is rather humorous - “That was because of my layoff.” He continued: “Of course, layoff is not a happy thing for everyone. But, it had really brought me some good fortune in my investment.” I still couldn’t understand his meaning. I asked him further: “Are you teasing me? Why layoff had helped you in investment?” He explained to me: “When I had a job. I did not have time to learn (or study) the method of prediction of stocks. Previously, I trade stocks randomly. Some time I have a gain, but, some time I have a loss. It happened to me one year, the loss was far more than the gain, and I had to file Schedule D for absorbing those losses in several consecutive years in filing my tax return, since each year the IRS only allows a person with a $3,000 loss limitation in stock trading.” Mr. R explained further: “When I lost my job, I had enough time to learn how to predict stock more accurately. And I also had more time to study my investment strategy and trading tactics. Because of lost of my job, I also had enough time to sit in front of a computer to catch the best time for my trading, i.e. I can make transaction at best time point. Volatility of stock price is the tendency of computer age trading. You need watch the screen tightly. That needs time. If I did not lose my job, it was impossible for me to have my own time during the day time when the stock market was so active.” He added: “My portfolio is not very big. However, those tickers of mine were all carefully selected. Those tickers cover some airlines, energy companies, financial institutes, and some companies in manufacturing industry.” 1

Mr. Should I follow his model of investment. mainly in the last century. The unique stock equation described in that book stimulated me to get a deeper thinking that induced me to develop my own wisdom in stock trading. A more precise stock sailing angle recognition helped me to figure out how to conduct my trading. To spend more time to learn how to predict stocks shall be the first important thing to any investors. I had read a book called as “Prediction of Stock with Gao’s Equation” (http://www.” He continued: “However. since the market is always changeable. is a great successful investor of his age and his time. as I had said to learn how to predict stock in the current market performance is of top importance. A company’s performance is not necessary 100% expressed in stock price.” I asked further: “Do you think that you can keep such a high return in the coming year?” He answered frankly: “I hope so.” I raised another question: “How do you think about Warren Buffett’s stock trading strategy?” He replied: “I am not so very much understanding or even admire his strategy like most people do. At a time its price raises like a rocket. There are always way. That is to predict stocks more precisely. That was not in a computer era.com/content/69829). But. So. W. However. 2 . way low under value for a specific stock. Miscalculation in stock prediction is very often. I am not saying that book helped a lot. B. but. way high over value and way. I still need to improve my skills in that direction in the future. The characteristic pattern of trading nowadays is higher volatility. certain chapters of that book are somewhat different from other investment teaching books. Rumors may induce one’s maloperation. I am not very much sure about that. To maximize the short term gain is more meaningful than long term investment. one thing is important above all. At another time its price may like dropping knives beyond your loading capability.He made an emphasis: “I used my own trading skills. one thing is clear to me.lulu. I could also have involved a 49% loss last year like what he had. I feel to consult some good books may of help.” And he concluded that to invest a small amount of money to purchase some useful books about different aspects or theory of stock prediction may change your existing trading pattern and increase the chance to win.

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