Bloomberg
Twitter CEO Dick Costolo (L) and Warren Buffett. Who’s your type?
SAN FRANCISCO (MarketWatch) — Today let’s talk about two big investment strategies in the news. They are beckoning, like personal ads on Craigslist.
There is the hot young thing in Twitter Inc.
TWTR +0.06% , which
filed for its initial public offering last week.
There is the MIILF (mature investor I’d like to follow): Warren Buffett and Berkshire Hathaway Inc.
BRK.A -0.04% BRK.B -0.09% , whose crisis-era investments have now
yielded more than $10 billion in returns.
Maybe you’re into both, but I’d bet many of you find one of them a little hotter. This is important, because knowing your investing fetish is a big determinant of continued success.
Now, let’s go a little deeper.
The case against Amazon stock
In this week's Barron's Bounce, Jack Hough explains the bear case on Amazon.com. Plus: Penn National and PICO Holdings get a lift.
Need we be reminded, there are three types of winning investors out there: the lucky, the smart and the cheaters.
So far, 2013 has been pretty good to each. Sure, a few alleged cheaters such as
Steven A. Cohen and his SAC Capital are finding themselves on the wrong end of the law, but that comes with the territory along with the black cape and disposable cell phone.
The lucky investors have done well. Hey, it’s a market where making money has been as easy as losing it was in 2009. Many people say they’d rather be lucky than good, and there’s some truth to that, but
John Paulson of Paulson & Co. made billions betting against the housing market in 2008. His bet after that was gold. Many of you know how that’s turned out. Luck is volatile. It also is often mistaken for smart investing.
And the smart guys? Well, they almost always do OK. The big advantage of being smart is that the strategy works even when things aren’t going your way. Sure, everyone looks smart when the S&P 500 Index
SPX -0.38% is up 15% from the same period a year ago. But how many of them will look good if the government defaults on its debt and the market is down 15% or more?
Investors like Buffett and the people who have backed Twitter are the smart guys. But they’re very different in their approaches.
Buffett is thought of as the ultimate buy-and-hold investor. His advantage is patience. He buys when things look bleak and waits and waits and waits. There is more to it than that too. Buffett buys safe. Very safe. He bought
Goldman Sachs Group Inc.
GS +0.26% and loaded up on
Wells Fargo & Co.
WFC +0.02% when it looked as if the whole industry might go under.
It didn’t go under for a very good reason. Governments have a history of trying to save their economic institutions. They’re just too important. So Buffett, who served as an economic adviser to candidate and then-President
Barack Obama, bought the banks. Seemed risky. It wasn’t. It was as safe as a walk through
Miller Park in downtown Omaha, Neb., on a Sunday afternoon.
Investors in Twitter such as
Suhail Rizvi , Chris Sacca, Union Square Ventures, Spark Capital and its founders pursue a very different strategy. They throw a lot of money at a lot of things and bet that one of them will become, well, Twitter, which by
some valuations will be worth $25 billion after its IPO.
