buffet and munger had a little experiment with shorting the fluff on NASDAQ. It stands to reason that the best "value-ers" of corportate assets could tell when a company was vastly overpriced, and they could. THAT was not the problem. Their expeirment was largely unrewarding and altogether frustrating. They even said Graham tried it for a while and got four out of five right, but got WIPED OUT on the fifth!
My read from this is that web and cm finally realized that OWNING businesses was what they wanted to do, and was what WORKED over the long haul when taxes and transaction costs were added back. The best investors are, above all else, businesslike in their investing. A corporate allocator of capital would scarcely be sitting in his office allocating precious corporate capital to his five best short ideas. WEB would argue that neither should the individual allocating his OWN capital.
The more businesslike an investor is, the LESS he will likely be sidetracked by BETS, GUESSES, or SPECULATIONS on the DIRECTION of individual securities, which, ultimatley, is what shorting is ALL about. Not to mention that the EGO seems more intimately involved when shorting. |
