Avoid a share market 'buffeting'

Warren Buffett is arguably the world’s best investor. When the top dog at Berkshire Hathaway took over the investment firm...

Warren Buffett is arguably the world’s best investor.  When the top dog at Berkshire Hathaway took over the investment firm in 1965, its shares were worth $US19.  At the close of trade on 5 June, it stood at a staggering $US192,100, while Buffet is reportedly worth a cool $US65 Billion.

However the superman of global investing has had a few kryptonic failures. According to a report in the well-regarded investor information service, Motley Fool, Buffett blew a couple of billion dollars on an investment in oil and gas exploration company, Conoco Phillips (NTSE:COP) in 2008. According to Motley Fool, Buffet suggests he made a major mistake as he “bought a large amount of ConocoPhillips when oil and gas prices were near their peak.”

Motley Fool argues that the mistake that Buffett made had nothing to do with picking the wrong investment at the wrong time, in this case, energy stocks. Rather, the great investor admits his mistake was his failure to seek advice. In 2008, Buffett said he made the investment in ConocoPhillips “…without urging from Charlie or anyone else”. Charlie is Buffett’s trusted long-term business partner at Berkshire Hathaway, Charlie Munger.

The point that Buffett is making, according to Motley Fool, is that “an investment decision should always be made after consulting others – whether they’re friends, co-workers, family advisers, or others – who are trusted.”

According to leading financial commentator Paul Clitheroe, Buffett also adheres to the view that a diversified portfolio of shares is preferable to a limited range of shares. “And in choosing your shares, Buffett advises us to ignore the sentiments of the crowd as this is likely to lead to some bad investment decisions,” says Clitheroe.

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