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Buffett On Thumb Sucking
Old 07-11-2009, 01:23 PM   #1
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Buffett On Thumb Sucking

In the section of his annual letter to his stock-holders explaining why their stock plunged 32% last year, Warren Buffett said, "I did some dumb things in 2008. . . . . sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action."

My question is this- isn't a fixed asset-allocation strategy an enshrinement of thumb sucking?

Ha
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Old 07-11-2009, 01:30 PM   #2
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I suppose it can be if one chooses to look at it that way. But most of us aren't Warren Buffett, either. Nor do we have investors expecting us to significantly outperform the market over the long run, either.

Unlike Mr. Buffett, I have no reason to believe I know anything that's likely to result in outsmarting the market. And I'm not privy to nearly the amount of "new facts" he is.
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Old 07-11-2009, 01:36 PM   #3
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HaHa, leave it to you to come up with a thought-provoking thread. Iíve thinking it over. What does thumb sucking represent--a refusal to move on to the next stage of your life? In that case it might be equivalent to working into your 90s. How old is Buffett now? Iím sure others here have better thought out ideas, looking forward to reading them!
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Old 07-11-2009, 01:46 PM   #4
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How to stop thumb sucking

Summary:
  1. Step 1
    Give extra attention and observe if conflicts or anxiety provoke thumb sucking. If so, help him find more healthful ways to deal with stress.
  2. Step 2
    Reward for progress made towards his goal. Don't think of it as a bribe because it's something he earned through effort.
  3. Step 3
    Paint something that tastes bad on his thumb, like vinegar or pickle juice. Don't do it forcefully or without his permission, but as a way of helping him achieve his goal. Then when he's engaged in television and sticks his thumb in his mouth out of habit, the bad taste will quickly remind him of what he's trying to accomplish.
  4. Step 4
    Distract when you see him putting her thumb in his mouth. If you engage him in an activity that requires both hands, he'll have to take his thumb out of her mouth to do the task.
  5. Step 5
    Invite friends over that don't suck their thumbs for frequent play dates. Peer pressure is a powerful motivator and if he surrounds himself with kids who don't suck their thumbs, it will be easier for him to not suck his.
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Old 07-11-2009, 02:23 PM   #5
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Step 4
Distract when you see him putting her thumb in his mouth. If you engage him in an activity that requires both hands, he'll have to take his thumb out of her mouth to do the task.
Just WHAT is going on in Step 4?
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Old 07-11-2009, 02:24 PM   #6
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How old is Buffett now?
Here, I'll get that.
Warren Buffett was born on 30 August 1930. Charlie Munger was born on 1 January 1924. So Buffett's almost 79 and Munger's 85.

Off the top of my head, here's a few other financial guys who are ER failures:
Schloss: 92.
Kerkorian: 92.
Redstone: 86.
Murdock: 85.
Pickens: 81.
Li Ka-Shing: 80.

Quote:
Originally Posted by CuppaJoe View Post
What does thumb sucking represent--a refusal to move on to the next stage of your life? In that case it might be equivalent to working into your 90s.
Buffett's thumb-sucking comment refers to his feeling/intuition that he should be doing something but, for whatever reason, failing to think the rest of the way through the issue, making a decision, and then acting on it.

So for him it could be as simple as a regret that he didn't invest in Intel back when it was a startup, or wishing that he'd sold his Coke shares back in 1998-9. Other regrets have been more complicated, like buying USAir shares in the 1980s or loading up on silver or buying into Salomon.

I think it's fair to point out that Buffett has acquired the knowledge and the experience to recognize when he should be doing something with an investment. Most of us will be lucky to ever get to that point, and that's why he recommends index funds for most of us.

I think Buffett is also carefully cultivating an image of how he runs Berkshire Hathaway. "Thumb-sucking" is one of those poignant phrases that makes him seem so endearingly human (Business Week calls it "so homespun it hurts") to distract the public from the way that he relentlessly gouges the hell out of desperate companies and governments seeks value. Advocating an additional stimulus program by referring to the government's existing stimulus program as "half a Viagra tablet" is another backhanded compliment homily endorsement.
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Old 07-11-2009, 02:29 PM   #7
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Just WHAT is going on in Step 4?
That's when distraction gets really interesting...
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Old 07-11-2009, 02:47 PM   #8
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Old 07-11-2009, 03:01 PM   #9
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Yeah yeah now this song is a warning yes folks a warnin' against the danger
A very very economy a social fibre mortal turpitude haha national security
And friends the danger is not it is not the long hairs
And it is not the warmongers all the squares all the truckusers all the fuss
Friends the danger the real danger is thumbsuckers
Yes you heard me my friends I think thumbsucker
And every time every time you make a peace sign with your fingers
And every time you push a door bell
And every time you're on highway stick your thumb
There's always there in the shadows some dirty sneaky thumbsucker
Who will leap out upon you grab your wrist
And start to suck your thumb drainin' all your natural thumbjuices
And leavin' you hopeless heartless a shakin' quiverin' crawlin' slaverin'
Thumbsuckin' addict for the rest of your unusual life

That's why I ain't gonna let no thumbsucker suck my thumb
It'll drive you crazy and leave you deaf and dumb
It'll make you crawl and climb the wall and leave you without no thumb at all
I ain't gonna let no thumbsucker suck my thumb

...

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Old 07-11-2009, 04:04 PM   #10
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In the section of his annual letter to his stock-holders explaining why their stock plunged 32% last year, Warren Buffett said, "I did some dumb things in 2008. . . . . sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action."

My question is this- isn't a fixed asset-allocation strategy an enshrinement of thumb sucking?

Ha
Assuming you have in place an appropriate AA for your need for risk and your comfort level then yes, suck your thumb rather then react to the noise. Bogleheads would call it "staying the course". Recent history has shown that it is very difficult to do and why not all can invest in this way, despite all the evidence showing it is effective.

DD
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Old 07-11-2009, 04:18 PM   #11
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Assuming you have in place an appropriate AA for your need for risk and your comfort level then yes, suck your thumb rather then react to the noise. Bogleheads would call it "staying the course". Recent history has shown that it is very difficult to do and why not all can invest in this way, despite all the evidence showing it is effective.

DD
I like the older one - eat what you want and die like a man. Beats thumbsucking.

Although my full auto Target Retirement 2015 induces some vertigo on market dips.

Good training for the upcoming season - I expect some Saint's 4th quarters to stir regret.

heh heh heh - stay the course. Soldier on. Speak Norwegian and watch yer SEC yield. .
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Old 07-11-2009, 04:36 PM   #12
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Here, I'll get that.
Warren Buffett was born on 30 August 1930. Charlie Munger was born on 1 January 1924. So Buffett's almost 79 and Munger's 85.

Off the top of my head, here's a few other financial guys who are ER failures:
Schloss: 92.
Kerkorian: 92.
Redstone: 86.
Murdock: 85.
Pickens: 81.
Li Ka-Shing: 80.
Don't forget John C. Bogle: 80.
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Old 07-11-2009, 04:57 PM   #13
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Assuming you have in place an appropriate AA for your need for risk and your comfort level then yes, suck your thumb rather then react to the noise. Bogleheads would call it "staying the course". Recent history has shown that it is very difficult to do and why not all can invest in this way, despite all the evidence showing it is effective.

DD
Wow! Where have I heard that one before?

Haha wins some and loses some, but I never sit around passively waiting for the hurricane to blow itself out. And I am getting close to 25 years of successful, pensionless retirement.

So parroting some academic theory doesn't really mean much to me.

Ha
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Old 07-11-2009, 05:01 PM   #14
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"Don't just stand there, do something!"

Sucking your thumb is doing something, right?
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Old 07-11-2009, 06:35 PM   #15
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Old 07-11-2009, 07:13 PM   #16
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Old 07-11-2009, 07:15 PM   #17
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A little theoretical purity?(Target Retirement), some Saint's games in season and some some good old sin with Norwegian widow dividend stocks to shore up SEC yield.

Glad I don't have shareholders like Buffett - going over my stocks with div cuts in 2008/9 is bad enough.

I suspect Berkshire is going to beat me back to even and will hold and sell positions where I have no idea what he is doing.

heh heh heh - er ah yes I admit to Buffett watching and trying to figure out whether I know what he is doing and should I also buy some of his selections. .
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Old 07-11-2009, 07:48 PM   #18
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Old 07-11-2009, 07:53 PM   #19
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You do NOT want to know what popped into my head.
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Old 07-11-2009, 08:02 PM   #20
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You do NOT want to know what popped into my head.
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