Tuesday, October 19, 2004

The Soothsayer Versus The Oracle: An Introduction

“A $10,000 investment in 1965 would be worth over $50,000,000 in 2003” or so the story goes when you hear about Warren Buffett’s Berkshire Hathaway. He is the “Oracle of Omaha” (Where he was born and lived/lives). The Midwestern boy who made good with his hard work and smarts. He is considered by many as the best investor who ever lived.

Well, Buffett definitely is one of the best in his niche. His niche is value investing, which was taught to him by the father of value investing himself, Benjamin Graham. There definitely is something to be said about growing your capital 5,000 times over a 38-year period. This equates out to a gain of around 25.15% per year for 38 years. That is extremely impressive since the average gain for the S&P 500 during that same time period was about 10.85% per year. So, maybe Mr. Buffett does deserve to be called the greatest investor of all time. He certainly would be the greatest investor of all time if that feat could not be repeated or even broken.

I also grew up and live in Omaha, NE. I also know a thing or two about value investing. There is, although, a difference between Mr. Buffett and myself (besides the few billion dollars). I also know how to use technical analysis as well as fundamental analysis. Technical analysis is something Mr. Buffett would consider witchcraft against his “Oracle” status.

The thing is I bet I could show Mr. Buffett a thing or two and beat Mr. Buffett at his own game. I will use value-investing criteria, but I will also use technical analysis in my investing decisions. I will be known as the “Soothsayer of Omaha” (Can you really give yourself a nickname…hopefully I’ll earn it!). So, here are the rules:

• A P/E ratio below 20

• A Price/Book ratio below 1.5

• Current Ratio greater than 2

• Revenue Growth greater than 15%

• Stock trading at a 25% discount or better to intrinsic value

38 years is quite a long period of time. These articles would be perfect for any individuals looking to retire within that time frame (or anyone looking for longer term value picks). Are you in your twenties and looking to retire between the ages of 50 and 60 with millions of dollars in your possession? If your answer is “Yes”, then I would keep a close watch on these articles and their contents.

A lot of these types of articles/newsletters promise the moon. How do you know the person writing the article or newsletter is legit? Well, I could explain to you why I am legit, but I would rather show you. I’m putting my money directly where my mouth is! I will be investing right along side you. We will be taking on the “Oracle of Omaha” together. That’s right; I will be posting my account status each and every month. Every buy and every sell will be there for all to see…right or wrong.

Unlike Mr. Buffett, we will not be starting out with $10,000. Not many twenty somethings I know have enough capital for that size of an account yet. But, I’m sure that many could get half of that scraped together. So, we will be starting out with a $5,000 account and in 38 years or hopefully less will be pulling $25,000,000 out of our accounts and retiring in style. Along the way you will learn a lot about investing and quite a few other things as well. I will be posting at least two articles a month. So, join the journey and let’s take on the “Oracle of Omaha” together.

Best Regards,

The Soothsayer of Omaha

2 Comments:

Anonymous Anonymous said...

Mr, Soothsayer,

Congratulations on taking the first step in a great journey. I'll be watching and reading with great interest.

Bon Voyage!

Regards, Aaron 

Posted by Aaron Day

6:44 PM  
Blogger jordan said...

Great job on your talk on currency trading. I have a currency trading secrets blog if you wanna swing by my place!

11:21 AM  

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