Warren Buffett versus CNBC High Frequency Traders – the difference in investment philosophy is dramatic and was clearly evident in two interviews. In the early morning, CNBC asked Warren Buffett to justify his recent controversial purchase of MORE shares of IBM, the worst performing stock in the Dow Jones 30 Index in the last two years. Buffett said he based his investments on IBM’s prospects over the next five or 10 years, and he encouraged investors to take a long-term view. And, he used the August volatility to pick up some more IBM shares “on sale”.
At mid-day, a CNBC reporter surprisingly asked a frequent guest speaker, who I would classify as a “high-frequency trader”, what he thought of Buffett’s remarks about buying more IBM. He nervously responded IBM has not been trading well and the majority of investors “he knows” are interested in what IBM is doing now and this quarter, and they are not interested in thinking in terms of 5 or 10 years.
Which investment philosophy makes more sense to you? If you agree with the first paragraph, your investment philosophy matches well with Valley National’s. If you agree with the second paragraph, we need to discuss further.