Buffettisms tough to follow in reality: Fund managers

Bangalore: Every year in May a few Indian fund managers dutifully make pilgrimage to the annual general meeting of Berkshire Hathaway to hear its chairman and legendary investor Warren Buffett dole out his investment maxims.

But with the ‘sage of Omaha’ in India this week, his fans from India are expecting the buffetisms to arrive a little ahead of schedule.

Buffett’s well-known buffetisms include — “Investing rules. #1 Never lose money #2 Never forget rule #1” and “Price is what you pay. Value is what you get”.

Most of his principles revolve around value investing, an investment concept that involves the strategy of selecting stocks that trade for less than their intrinsic values. Value investors actively seek stocks of companies that they believe the market has undervalued. Buffett is also a firm believer in investing long term and frowns upon active trading. This is amply indicated by his maxims such...as “Don’t sell and buy actively”, “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years” and “Our favourite holding period is forever”.

While Buffett has being hailed as one of the greatest investors of his time, abiding by his investment precepts is not all that easy. “Though a lot of what he says is fascinating, it’s damn tough to internalise his philosophy,” said an Indian fund manager, who has in the past attended Berkshire’s AGMs, and didn’t want to be named. “I am not a great believer in his philosophy. The market realities that I have grown up with quite often don’t let you follow some of the long-term strategies practiced by Buffett,” said Andrew Holland, CEO – equities, Ambit Capital.

On Tuesday, during a press meet in Bangalore, Buffett’s buffetisms came to the fore once again. “Only in what you...understand” and “Look for businesses that can have a sustainable economic advantage and don’t pay a high price for buying them” were among the aphorisms that stood out. Although his principles may be difficult to follow, Indian fund managers concede that the man himself is a genius. “India may have a few rich investors but none of them come close to matching Buffett’s genius,” says the fund manager quoted earlier in the story.

Buffett is in India this week to launch his distribution platform www.berkshireinsurance.com, that will sell insurance products of Bajaj Allianz General Insurance. Investors that have bought motor insurance policies of Bajaj Allianz through this website will get a chance to meet Buffett. Buffett is also slated to meet Indian business leaders in New Delhi on Thursday to discuss philanthropy along with Microsoft founder Bill Gates....