By Tim Hanson and Brian Richards
Have you ever bought a stock because Warren Buffett bought a stock? You know, like Coca-Cola (NYSE: KO) or Wells Fargo (NYSE: WFC)?
If so, you're not alone. In fact, thousands of investors follow Buffett's every move, and that's such a hassle for the Oracle of Omaha that he has actually (unsuccessfully) lobbied the SEC to give him a dispensation from disclosing his stock picks.
Heck, it got so bad that in 1999, Coca-Cola was trading for as much as 40 times earnings -- an unbelievably high number for a steady consumer staple that sells sugar water.
Yet, if you believe Alice Schroeder's account in her Buffett biography The Snowball, Buffett wouldn't sell Coca-Cola even then because "the price of Coca-Cola could plunge as a result."
After all, if folks had mindlessly followed Buffett in, thereby driving up the price, they would just as surely follow him out.
in:
http://www.fool.com/investing/international/2009/04/30/why-you-shouldnt-follow-warren-buffett.aspx
Ruin-Nation
11 months ago
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