Warren Buffett always talks about investing being a no called strikes game. In other words, one does not have to invest in every investing opportunity presented. We sit and wait for that “fat pitch.”
In a recent interview on the Fox Business Channel, Warren Buffett talked a bit about those fat pitches that he did not swing at (Starbucks, Fannie-Mae, Wal-Mart, Costco). Unfortunately for investors, this will occur more than once and one has to not those fat pitches get away too often.
From personal experience, those missed pitches hurt the most when one’s portfolio is lagging the benchmarks. Around September of last year, analysts were expecting steel prices to fall and many steel companies were trading at or near 52 week lows. This caught me by surprise as I knew steel prices were on the rise and not on the decline. I knew this from our steel suppliers who warned me about great demand from overseas. The same supplier also told me about consolidation in the industry (his firm was bought out by Ryerson (RYI)). So there I was with what Peter Lynch called the “amateur edge”. Nuecor (NUE) in particular caught my attention as it appeared in the magic formula screen for the top 25 ranked companies with a minimum market cap of 2000 million. I did my usual homework of reading several 10-K’s and 10-Q’s and thought the company would be a great buy, it was only a matter of swinging and waiting for the street to catch up to me. The street eventually did catch up, only problem is I never swung at that fat pitch. Nuecor recently traded as $83.
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{ 1 comment… read it below or add one }
Hi Alexg - thanks for posting the video. Sometimes it may seem hard to believe that even the Buffett could miss a swing! Yet he has admitted to missing several.
I like his way of dealing with his missed opportunities… he’s like… I don’t look back… there are too many other opportunities ahead!
Have a great day!
Be well…