Portfolio management: lessons learned from Buffett
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“Be Greedy When Others Are Fearful”: Why Buffett Didn’t Buy More at the Bottom (Yahoo Tech-ticker)
More importantly, I think controlling one’s emotion is key in this market (like yesterday and today :-(. Obviously easily said than done. Yesterday I read the WSJ top page story on people trading AIG stock, most of them lost money eventually (I believe so, at least most people gave back the gains). Trading AIG stock is an extreme example, because of its volatility in last month (August).
Other lessons from Mr. Buffett:
cash management: sell JNJ, bought Goldman (NYSE:GS) and GE preferred shares with warrants in last Sept. Also have some cash at hand when trying to make a killing.
tax deferral: sell COP, ETN recently.
1) Stock had a nice run;
2) Because he bought those stocks at high price, he can generate loss to offset the gain from other sources, in order to save tax.
In reality, he actually bought some of those stocks at low price too, and he is profitable on those positions.
ETN: buy 2,908,700 shares, Q3 2008, ave. price $71.1 (source: GuruFocus)
ETN: add 291,300 shares, Q4 2008, ave. price $43.7
ETN: sell 1,200,000 shares, Q2 2009, ave. price $44.8