I Am So Tired of Warren Buffett!

My day job is editing and stock analysis here at The Motley Fool. And while doing my daily work, I see enough Warren Buffett quotes and praise to satisfy anyone. I'm sure you do, too. The one quote we both probably see the most is this one: "Be fearful when others are greedy, and greedy when others are fearful."

Well, today, I have a request for all you Warren fans out there (and the Fool, while a big fan of Mr. Buffett and his quotations, is hardly the only one indulging itself): Can we just stop with that one for a while?

Which should I be? Fearful or greedy?
Right now, the market is up some 62% from its March low. But that is still 31% below its 2007 high. So tell me. Is now the time to be fearful because stocks are still overvalued and the rally won't last? Or is it time to be greedy because things are still a long ways from the frothy peak?

Greedy, because gold is priced too high which leads some to suspect that the dollar is going to come crashing down? Fearful because earnings at banks like Citigroup (NYSE: C  ) or manufacturers like Caterpillar (NYSE: CAT  ) are not "real," but rather come from some accounting allowances or cost cutting? Health care is hated, so I should be greedy, right? Commodity stocks like fertilizer producer PotashCorp (NYSE: POT  ) have been beaten down, too, but the world's still gotta eat. But wasn't that the story that drove them to ridiculous highs last year? And if I buy, is that being fearful or greedy?

I'm so confused … aren't you?

Let's review the tape
Last winter, sure, the world was ending and everyone was as fearful as any Buffett worshiper could hope for. For those who believed that it wouldn't turn out as bad as predicted, and so far it really hasn't, stock prices were very tempting. For instance, I bought shares in Intuitive Surgical, betting that people still needed prostate surgery and hospitals would continue to use this company's robotic surgeons. And, hey! People continued to get prostate surgery using this company's robotic surgeons. Procedures climbed, along with my stock.

And those who expected banks to come through the turmoil more or less intact, like Wells Fargo (NYSE: WFC  ) or Goldman Sachs (NYSE: GS  ) , have been handsomely rewarded. But what should we be doing today?

Inhale, 1, 2, 3, exhale, 1, 2, 3
Professor Siegel, of the Wharton School of Business, has long argued that stocks are the place for money if we want that money to grow faster than any other asset class, including precious metals, cash, or bonds. Yes, there are times when one or the other will beat stocks, but picking those times out is difficult at best.

Besides, I don't trust my timing ability to "get into" gold when it's at $700 an ounce and "out" when it reaches $1,000. After all, I'm the guy who "shorted" most of the legacy airlines -- you know, UAL, Delta, US Airways, those guys -- in our CAPS online stock-picking simulation just in time to watch their prices soar as the price of oil started to come down in the summer of 2008. My rating went from 80+ (out of 100) to less than 20 in about two weeks! (Thankfully, it's since climbed back above 95.)

So rather than trying -- and failing -- to ride the trend of the day, responding to perceived greed and fear, why don't we keep on doing what has worked so well? Look for companies that have a strong competitive advantage, such as Coca-Cola (NYSE: KO  ) or Pepsi. These companies' name brands are known around the world, and people still buy their soft drinks and snack foods even when times turn tough.

Then, cap it with a long-term view, letting your winners run and pull your portfolio along with them. Altria (NYSE: MO  ) , the American cigarette maker, made those who bought and held on for years, very rich.

That's what David Gardner, co-advisor at Motley Fool Stock Advisor and Fool co-founder does. He ignores the Oracle of Omaha's overhyped pearl of wisdom about fear and greed -- but like Buffett, he's always looking for those companies that have a strong competitive advantage that can be held for years. Companies such as Marvel Entertainment. He first advised subscribers to buy this company over seven years ago and then proceeded to hold on, actually recommending it three more times. After Disney announced its purchase, the four positions in Marvel had become winners for Stock Advisor subscribers to the tune of 1,356%, 805%, 261%, and 70%.

To find out what company he's latched onto this month, along with his five Best Buy Now stocks, sign up for a free 30-day trial. There's no obligation.

Jim Mueller spends too much time on the Stock Advisor discussion boards, where he loves to discuss investing and individual stocks. He owns shares of Coke, Pepsi, and Intuitive Surgical, but no others mentioned above. Intuitive Surgical is a Rule Breakers recommendation. Walt Disney and Marvel Entertainment are Stock Advisor selections. Walt Disney and Coca-Cola are Inside Value selections. Coca-Cola and PepsiCo are Income Investor selections. The Fool's disclosure policy is neither fearful nor greedy, but it's also not as famous as Warren Buffett ... yet.


Read/Post Comments (31) | Recommend This Article (60)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 13, 2009, at 3:59 PM, pondee619 wrote:

    You missed the point. The question, pursuant to the cited quote, is not "Which should I be?" the question is "What is everyone else?" You can't get the right answer if you don't know the right question.

  • Report this Comment On October 13, 2009, at 5:15 PM, ppointer wrote:

    Wasn't that long ago when ISRG was less than half what it is today and Fool was recommending against it.

  • Report this Comment On October 13, 2009, at 5:37 PM, TMFGebinr wrote:

    Actually, Intuitive Surgical has remained an active recommendation in Rule Breakers for the last 4.5 years. It was recommended for the fourth time late last year. MDP considered it, but decided it was too expensive, even near the lows. Given their growth model for the company, they decided not to buy. While that appears to have been the wrong decision so far, six to nine months is really still too short a timespan to make a definitive conclusion.

    Plus, remember we're the *Motley* Fool, which means we're willing to debate the issue and express (and publish) different opinions, even at the same time.

    Cheers,

    Jim

  • Report this Comment On October 13, 2009, at 7:39 PM, ReadEmAnWeep wrote:

    "I Am So Tired of Warren Buffett!"

    Well that's rude... He has a right to be here as much as you!

    ... So jk... LOL and LMAO with me guys!

  • Report this Comment On October 13, 2009, at 9:18 PM, jbreth wrote:

    Any one who doesn’t like and or respect Warren Buffet is truly an idiot. Read his books, listen to his tapes and stop being so jealous of the fact that you can’t make money, but some how, some way he always does. Walk in his shoes before you pass judgment. As far as being greedy or fearful. Listen! Does everyone think the market will correct? Sounds like fear. What has the market done? Go Warren!

  • Report this Comment On October 13, 2009, at 10:08 PM, SeeknDestry wrote:

    Pondee hit it on the head. I would follow that right now by saying that investors are cautious. That will either lead to a fallout, or another incredible rise. So right now the market is in a stalemate.

    There are still many, many undervalued stocks. My example is GE trading at 12.0 P/E. Ok they cut their dividend and aren't doing so well now, but you need to see things as they will be and not as they are. While I cannot predict how or when, I can tell you the market will rise eventually. With this so will the prices of stocks. Then a few years later when everyone thinks we are invincible again, I will sell.

  • Report this Comment On October 13, 2009, at 10:09 PM, HappyEndingz wrote:

    "Which should I be? Fearful or Greedy?"

    Mr. Buffett's solution to this query has earned him close to $60Billion (that's Billion with a B) over the past 50 years.

    My take, then, is the effort spent pondering this subject - tiring though it may be - is time well spent.

    CE

  • Report this Comment On October 13, 2009, at 10:43 PM, blesto wrote:

    Jim,

    You seem fearful. So, shall I be greedy?

  • Report this Comment On October 14, 2009, at 12:19 AM, mikecart1 wrote:

    Yeah I used to like Buffet, only because he was so rich. But I read his bio and saw how he made his billions. I think the guy is a moron that got lucky on a few stocks/company purchases while everyone else was getting high in the 60's and 70's. Yeah I know his bandwagon soldiers will reply and flame me. But they know I speak the truth. Buffet is nothing special. Put the phrase "right place at the right time" and put his picture in it. There are far better investors than Buffet. Just because he has more money doesn't mean he is smarter.

  • Report this Comment On October 14, 2009, at 10:13 AM, good2beme wrote:

    mikecart1: No, he might not be smarter, but he is richer! Luck, maybe a little, but it's more like you make your own luck.

  • Report this Comment On October 14, 2009, at 11:03 AM, Jayant12 wrote:

    "Be fearful when others are greedy, and greedy when others are fearful." - I believe it was Benjamin Graham who said this. And if you're tired of Benjamin Graham, then I don't think you should call yourself an investor... "speculator" may be more appropriate.

    As for being fearful or greedy, well, if you can't clearly tell whether people are fearful or greedy about a specific stock then, maybe they're neither. In which case, there are other methods prescribed for valuing stocks that you should consider.

    @mikecart1: Yes, there are deals that Buffet has made where he was probably lucky to get out unscathed and I think he'll attest to that himself (if he hasn't already), but there's no doubt that he's incredibly brilliant at valuing stocks and he would still be rich if he wasn't so luck, just not AS rich as he is today. Also, he's said that there were deals that he missed out on, so I guess those were the times he was 'unlucky'.

    I think Buffet was brilliant at executing Graham's investing principles and it's no secret that there are a lot of Grahamites out there who are extremely wealthy (although not as wealthy as Buffet). If they were as obsessed with stocks as Buffet is, they'd be topping the rich lists too.

  • Report this Comment On October 14, 2009, at 11:19 AM, clanza875 wrote:

    sensational headline to plug a losing newsletter... yawn

  • Report this Comment On October 14, 2009, at 2:16 PM, schn1eck7 wrote:

    oh.. i'm sorry. did someone who is very quotable & extremely successful get on your nerves? that's too bad. maybe you want to make big claims & find a reader base out there on the internet, but nobody will take you seriously if you insult someone such as warren buffett.

    he had read more books & done more research on everything by the age of 25 (fifty years ago) than you have read by this age.

    as far as criticizing him about market psychology & then COPYING him about the ideas on companies with a durable competitive advantage.. well.. that's just sad. criticizing the very man you copied to get your point across- how does that make sense?

    also, you'll notice that the higher the stock market moves, the more everyone feels like they are right when it comes to investing. they start bashing individuals such as warren buffett. well i'll let you in on a secret- when the market shoots up, all the value plays with a 'margin of safety' shoot up just as quickly as speculative stocks. the difference is during downturns. you may have a winning portfolio during a bull market, but how much was that worth during the 'dot.com' bubble of the late 90's? nothing. your house was repossessed if you owned any tech stocks ten years ago. buffett was criticized almost daily during that bull market. he's been called "out of touch" and "old fashioned" by speculators believing they understand the stock market. contrarian investing in value plays is how to make sure of your financial safety.

    ok, now that my rage has calmed down after that paragraph i have one thing left to say. i know you are more than anything wondering what buffett's thoughts are on the current market direction, but he does NOT make market predictions. he gives a framework in which people should think & that's all the quote was about. not timing the market.

    do some more reading, you'll get there eventually mr. jim mueller.

  • Report this Comment On October 14, 2009, at 5:44 PM, TMFGebinr wrote:

    clanza875: Glad you liked the headline.

    schn1eck7 and others: I'm a very big fan of Mr. Buffett, have read his writings extensively, and use many of his teachings in my own investment philosophy. That doesn't mean that I shouldn't point out the ridiculous use one of his more famous sayings has been put to on occasion. :-)

    Cheers,

    Jim

  • Report this Comment On October 15, 2009, at 1:53 PM, tireman63 wrote:

    Another comment by the Sage of Omaha concerns airline stocks--look it up and you will see that your airline stock buy was a turkey.

  • Report this Comment On October 15, 2009, at 2:04 PM, booyahh wrote:

    *** Which should I be? Fearful or greedy? ***

    Ummm...you're supposed to figure out how others are behaving, and then do the opposite.

    Back in March, others were clearly fearful. Thus, that was the time to be greedy. Now, not so much.

    And if you're not sure whether others are fearful or greedy, then the best course of action is to do nothing.

  • Report this Comment On October 15, 2009, at 2:31 PM, RetireOrExpire wrote:

    Sad you totally missed the meaning of that simple quote.

    You don't pick what it is.... The general sentiment is either bullish or bearish. When "everyone knows" the market can only go higher it is likely just about to crash and when everyone is to afraid to risk a nickle it likely is about to form a V shape.

  • Report this Comment On October 15, 2009, at 4:26 PM, globalsailor wrote:

    Tell me what you think of this. This method uses hard numbers rather than your instincts to be fearful/greedy. Take a look:

    http://caps.fool.com/Blogs/ViewPost.aspx?bpid=277456&t=0...

  • Report this Comment On October 15, 2009, at 5:34 PM, SeeknDestry wrote:

    Mike have you heard of Geico? Goldman Sachs?

    Have a nice day.

  • Report this Comment On October 15, 2009, at 6:42 PM, drborst wrote:

    Great title.

    Fearful or greedy? How about neither... I've always taken that quote to be in reference to fairly unusual times, and it gets things just about right.

    People were greedy during the housing and tech booms. About two years ago I shopped for a house and found one that had been sold three times in 18 months, and not occupied during that entire time. That's greed and it made me fearful.

    A year ago, when Lehman failed, was the begining of the fear and a good time to starting thinking about getting greedy.

    I'm a fan of Buffett's one liners, because they stick with you better than Graham's book.

    And as for worshipping or trashing the guy... Let it go. He's worth $50 Billion for three reasons. He's a pretty good investor, he doesn't spend much on anything, and he's old. Anyone who invests for 60+ years without spending is going to have a pile of money

    Most people invest to make money so they can spend it on something, like retirement or travel. It seems Buffett invests because it's the only thing he enjoys doing. He couldn't even figure out how to give it away (he seems genuinely thankful for Bill Gates being in a position to spend a sum that large).

  • Report this Comment On October 16, 2009, at 2:08 AM, ozzfan1317 wrote:

    Buffet is a great example to follow and if you follow his investing principles you will probably do quite well. Most of my positions were built around march thats the easy part if you don't look at a companys fundamentals the easy money wont be there when a new bear market comes.

  • Report this Comment On October 16, 2009, at 6:07 AM, PaddingFool wrote:

    drborst:

    You make a very good point. Buffett doesn't spend any money! That's 'one' reason why he has so much of it.

    Yes, he's a very good investor. Very good indeed.

    But I'm sure the fact that he still lives in his old house, drives a very old car and clearly enjoys the simple (cheap) pleasures of life has a big affect on his bank balance.

    In some respects I respect Buffett not for his enormous wealth and investing skills but for his simple outlook on life. If we all followed his ways EXCEPT his investing skills we would still be a lot richer. Maybe not in regards to our portfolio growth but certainly in our quality of life and the general feelings of happiness and contentment we feel.

  • Report this Comment On October 16, 2009, at 8:27 PM, moneysavy wrote:

    Mr. Author: today was your only way to possibly grab a few mouse clicks to tag Mr. Buffett's name to your article? Buffett: brilliant genius and a great man. Your article: not worthy of a mouse click!

  • Report this Comment On October 17, 2009, at 12:14 AM, hexgod wrote:

    I'm with you! I am tired of hearing about Buffet too. Frankly, I don't want to be greedy or fearful. Money isn't my whole life, but I try to do the best I can while investing not only for the future but in my community and other people. Who cares if Buffet is rich? That's really not my number one goal in life. Thanks for refreshing opinion. It's not easy swimming against the flow!

  • Report this Comment On October 18, 2009, at 5:30 AM, RGGrass wrote:

    I would be a fan of anyone who shares with the owners of the company the profits of the company.

    Berkshire Hathaway has paid out how much in dividends?

    Warren Buffet has been paid how much to run BRKA?

    No, I am not a fan. He buys large percentages of companies and has them pay dividends to BRKA but that is where the paying stops. Never heard him tell Coke to keep the dividends and reinvest have you.

  • Report this Comment On October 19, 2009, at 2:49 AM, BDOT071 wrote:

    RGGrass,

    You are not a fan, but shouldn't you at least know WHY Berkshire Hathaway doesn't pay dividends? It would be foolish for BRK to pay dividends, even in a dividend income tax-free world. In Buffett's view, if you can allocate capital better than someone else, you should do it, not them. Can retail investors (i.e., folks who buy BRK) make more money by allocating (investing) potential dividends than Buffett can? If retail investors could, then why buy BRK--just buy companies yourself (or shares in companies) and collect the dividends all you want.

  • Report this Comment On October 19, 2009, at 3:00 AM, BDOT071 wrote:

    Saying Buffett was just lucky a few times in his career is like saying that other than Joe Dimaggio's approximately 315 hits in every 1000 at bats, he was an unremarkable baseball player. Buffett plays in a game where if you are right just 60% of the time, you are in the top 10 of the greatest investors of all time. You only need to rack up a few wins to make a lot of money.

    The opposite view would hold that other than one software company, Bill Gates is an unremarkable businessman.

  • Report this Comment On October 19, 2009, at 3:33 AM, Racovius wrote:

    Other than Microsoft, Bill Gates did not do much of anything really...

  • Report this Comment On October 19, 2009, at 2:50 PM, BDOT071 wrote:

    Re Bill Gates, Considering that he has founded what will, in essence, be the largest charity in the world which will effectively save more lives than any effort ever endeavored by man, I know of no one who has accomplished more--Da Vinci and Ben Franklin included. To say he is a good businessman irregardless of his industry would be an understatement.

  • Report this Comment On October 19, 2009, at 4:31 PM, globalsailor wrote:

    Being fearful versus greedy isn't about playing market psychology. It's about owning assets that are non-correlating in the proper proportions. Take a look at this to see how exactly that works.

    http://caps.fool.com/Blogs/ViewPost.aspx?bpid=277456&t=0...

  • Report this Comment On October 20, 2009, at 12:07 PM, TaylorStroh wrote:

    Stop getting bent out of shape for talking about Buffet. I see points for both sides and I believe they are right, luck..sure, smart...sure... the list can go on and on, but you have it right writer, sometimes we cant just go and say this is best and nothing else, thats just not real smart for anyone to do. (at least in investing). He is sparking convorsation which can lead to good ideas, some maybe crazy others not so much. Lets take this as it is. A platform for discussion that may lead into something worthwhile.

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