We all have our heroes in the career we want to enter. 50 years a go a potential astronaut may have looked to the skies and muttered the name "Neil Armstrong". Today however I look to the markets and mention the name "Warren Buffet". As much as I idolize this true icon for investing I believe his methodology has some floors.
Warren Buffet is known as standing by the principle that daily fluctuations of a stocks price don't matter. In a recent article he had been quoted as saying it was like a farmer shouting out prices to sell his farm to his rival or to purchase the rival depending on the state of his finances. Mr Buffet believes this would come down to a mental disposition but I would argue against that. We live in a world of mathematical trends and algorithms, fluctuations in a price shouldn't mean nothing instead it should signify uncertainty. Nobody on this earth with any financial knowledge would purchase a car if the price of the car was up and down 5% at a time each and every day so why should stocks be any different? Stocks work on the simple principle of supply and demand with the price being set at the equilibrium point yet some days supply being greater then demand lowers the price and vice versa. For too long now traders have sat back and said "who cares" to daily trends when instead there is a lot of money to be earned from capitalizing on these fluctuations.
I can not disagree that Mr Buffet is an icon and has earned a lot of money however could this be because the principles he set into place were revolutionary and have spawned a generation of imitators when instead what we need are revolutionaries. Value trading is a great idea but only if the person sitting next to you isn't doing the same thing, until then come up with something new and hit the pendulum trading books.
