Main Street vs. Wall Street

Have you ever come across something that made you laugh because it hit the nail on the head, and no other words were necessary?

This happened to me when a client emailed me this picture, which exactly resembles how Main Street feels about Wall Street these days. Out of sensitivity, I deleted the obscenity, but I think you get the picture…

MarketWatch featured a story titled “Hedge Fund Managers ‘funereal’ in midst of crisis.” It elaborates on the problems and losses hedge funds have had this year, which some have called unprecedented. I guess many funds forgot that, by definition, they are supposed to be hedging in some form and not having outright positions without protection, which translates to using sell stops or offsetting trades.

It’s an interesting read, but one paragraph called “Buffett bashing” especially caught my attention:

“Be careful buying ANYTHING today,” Kyle Bass, managing partner of Hayman Advisors, warned in an Oct. 17 letter to investors.

“Mr. Buffett has enough money to be able to have his holdings drop 50% and still fly in his jets and live the way in which he has become accustomed,” Bass wrote. “Do you have enough capital to take what you have left, cut it in half, and continue to live the way you have for the past few years? I don’t.”

[emphasis added]

That too hits the nail right on the head. There have been armies of followers trying to imitate what Buffett has been doing with his investments, and many have failed miserably. Why? Read that last paragraph again—there is your answer why Buy-and-Hold for the average investor is a losing proposition.