Recently, one of Guerilla Investing's sources of inspiration - Mr. Warren Buffett - has been hit by a series of setbacks. His company's stock has dropped 34% from last year. He is now the second richest man (not that that's a bad thing) due to a shrinkage of over 50% of his net worth - down to just $37 billion from $62 billion a year ago. His flagship company, Berkshire Hathaway has just lost its top credit rating from Fitch.
Another of our idol, Mr. Marc Faber, declared that the strategy being employed by Warren Buffett "is already dead, and has been dead for the past 10 years." I've attended one of the former's talks here in the country before but it's a tad difficult trying to understand his English due to his strong Swiss accent.
Anyway....
I am sure that the span of Warren's career has saw him going through some of the toughest financial climates post-Great Depression. And time and time again, he's been able to prove his critics wrong. The only question now is whether this will still hold true 5 or 10 years from now.
Certainly those who follow the buy and hold method have seen their wealth dwindle by 40-50% from their original investment values. Even our local mutual fund companies have suffered a great deal in terms of their NAVPS.
I guess instead of focusing on the buy and hold strategy, it's better to stick to the other philosophy that Warren Buffett preaches - that is, to diversify. There's also a mainstream thought that you shouldn't invest more than you can lose.
These simple reminders hopefully stick with us even when the bull run returns. Everything moves in cycles.
Have a happy weekend!
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