First Person: Why I Don’t Invest Like Warren Buffett

Yahoo Contributor Network

*Note: This was written by a Yahoo! contributor. Do you have a story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.

COMMENTARY | I often wonder to myself: Would a young Warren Buffett listen to the advice of an older Warren Buffett?

I imagine a young Warren Buffett wouldn't invest in a stock just because of a stock tip. Although a Warren Buffett "stock tip" holds a bit more weight than the stock tip from a neighbor or coworker, I rarely follow Buffett when it comes to specific stock picks.

But I do think Buffett, one of the world's wealthiest men, has a great feel for the overall trends of the economy and specifically the stock market.

I like Buffett's philosophy, which is to buy low, sell high. He finds undervalued stocks. He buys on the bad news and sells on the good news. I do that on a regular basis with my pharmaceutical and technology stocks.

I agree equities do seem "safer"

According to an article by MSNMoney, Warren Buffett says stocks will do better than gold and bonds. I completely agree. Buffett was quoted as saying equities would "prove to be the runaway winner." Stocks have been beaten down for the past two years, and it's time for a rally.

I rather go with my own gut

At the same time, I am not rushing out to purchase shares in DirecTV, Wells Fargo, Liberty Media or IBM just because Buffett is buying shares in those companies for his Berkshire Hathaway fund.

In some cases, I don't chose to buy shares in companies that I can't feel good about. For example, I can't profit off a tobacco company or manufacturer of junk foods and sodas whereas Berkshire's largest disclosed holding is Coca-Cola, according to MSN Money.

I like to bank on the unpredictable

In the past Buffett has said he avoided technology stocks because they are difficult to predict. That's one of the reasons I love technology and pharmaceutical stocks. I can accurately predict that a stock that is up in value will eventually go down. And a stock that is down in value will eventually go up. Of course, sometimes companies fail and go bankrupt.

While it's interesting to find out what Warren Buffett is investing in, it's not always prudent to follow his lead in my opinion. But, then, I'm not a billionaire.


View Comments