When you make some high sounding statement, have you been asked:

‘Do you think you are Tata or Birla?’ right? or ‘Do you think you are Ambani?’

If you are born / brought up in India, chances are you would have heard that, right?

Well, I am not sure I want to be investing like the Birlas – in their areas NOR in the people that they have! But this post is not about that.

How many people have told you this: “Invest like Warren Buffett”.

Excellent piece of advice, now how I wish it were possible.

Let us get the facts right, WB is NOT the world’s greatest fund manager.

He is not the world’s most charitable person. He is not….there is a whole list of what he is not. So copying him is not only tough but also impossible. He is a hard nosed businessman who very strongly believes in the American capitalistic way and also is convinced that his strategy will work over the next few years.

Remember if you were born in a rich and prosperous nation, had the whole world market open to you, YOU WOULD BELIEVE in capitalism, nothing wrong.

Sadly we are NOW in a far more difficult world. Many of today’s younger people are worried about the bad effects by products which their companies make. WB had/ has no conscience pricks about investing in Tobacco, Goldman Sachs (he keeps criticising the BFSI space nevertheless), Coke (sugar addiction is worse than heroin addiction), Moody (the same people who rated all those junk bonds as AAA), …

NO THIS IS NOT A CRITICISM OF WB, just stating the facts.

Also do remember to invest like Buffet you should be able to buy a business outright, take part in the management, speak up the industry, speak up the markets, speak up the share. Take the company private, sell off the non productive assets, make wholesale changes, speak to the bankers and make funds cheaper, cancel ESOPs, issue Esops, induct a couple of billion as risk capital, subscribe to options, fund a few billion as a loan,….and then take the company public. How much of this do you EVEN understand, forget doing?

WB can buy 24% of the equity of a company, do a lending deal at usurious rates (taking the assets for collateral) and make money when the company does well.

Dammit, he can make money even if the company were to go into liquidation, HE COULD BE MAKING MONEY. He could pick up a stake in a very important supplier and make money on that deal.

Prashant Jain, Naren Sankaran, Balasubramainam, Sunil Singhania,……….none of them can do this. Forget whether they can, they CANNOT, because they are fund managers, not business owners.

The people who can do this are business owners like Deepak Parekh, Dhirubhai Ambani, Vellayan, Tatas, Birlas, Anand Mahindra…..et al.

So if you have to compare your performance compare yourself to fund managers – you can do all that they can, but not to WB. WB can only be compared to the second set of people – and please compare their performance to WB, it is comparable and in far more difficult circumstances 🙂

And before you compare yourself to the fund managers please do remember they have research teams, analysts, assistant fund managers, …..etc. to help them. You are a lone ranger, so all the best.

I also assure you that YOU have it much easier than a fund manager when it comes to asset allocation, short term pressure, profit booking norms, making buy logic notes, re allocation, buying puts, etc.

Time I wrote on why ‘A fund manager is ENVIOUS of a retail investor’….wonder why I have not!

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  1. Sanjay Singhaniya

    A nice article. It explains well that WB does not take minority share holding. He simply takes controlling of a business by buying it outright. We should compare him to Tata, Ambani, Birla. Not to mutual fund manager.

  2. Well, WB did have his beginning with comparatively very small amounts. He became what he is today starting as a retail investor and as a fund managar (in the sense he took monies from few known people). The situations across 60-70 years have been changing all through, so don’t even know if there can be comparisons or if there can be modelling around what another investor did etc.

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