Trader: How Warren Buffett missed the market rally

During a recent Yahoo Finance Premium webinar, Yahoo Finance's Jared Blikre and Brian Shannon, CMT and founder of discuss the stock market rally and how Warren Buffett and Stanley Druckenmiller — two of the world’s highest profile investors — may have missed the boat.

Video Transcript

JARED BLIKRE: A lot of the pros, like from Stanley Druckenmiller to Warren Buffett, I think got the timing on a lot of this stuff dead wrong. And they've come clean, but it just goes to show you you have to have a plan where you can manage your risk. And could you talk about how you developed one and what works for you and maybe what works for some of the beginning traders?

BRIAN SHANNON: Yeah, great question, and I think it boils down to time frame. You know, so Warren Buffett wasn't able to adjust because his time frame is so long term that the markets move quicker than he was able to. And even Stanley Druckenmiller, who's somewhat notorious, I guess-- infamous, whatever you want to call him-- for being an aggressive trader, maybe the handwriting on the wall wasn't there for him either.

There's no shame in that. Every one of us underperforms at some time, whether it be a bad stock idea or, you know, just our general assessment of the market. The key is to not fight the market.

For me personally, my preferred time frame is what I think-- you know, which is why it's my time frame. It's the best one to have, which is a swing trader. So, you know, two days to maybe two, three weeks is generally the maximum that I hold a stock, and I leave it up to the market to tell me. So I have a backup plan on each every trade.