Tim Sykes has this habit of making fun of value investors (2).
So, value investors, listen up; you’re all a bunch of little sissy girls! You’ve become spoiled with the assets you manage, your mainstream credibility and the money you earn. I respect your strategy, but understand this:
I’m comin’ for you
One of his comments really caught my eye.
LOL, I lost money when I tried investing! If I stick to my trusty charts, I’m always safe. Only risk is getting halted or news. Tell me this, how long would it take to turn $12k into $2 million using value investing? Exactly, you’d be as old as Buffett. If you’re lucky.
The truth is trading is IDEAL for smaller investors looking to become wealthy.
Ok Tim, I will take you up on that challenge.
First let’s look at Buffett
http://en.wikipedia.org/wiki/Warren_Buffett
Now let’s look at the beginning of his investment career.
1956 Warren Buffet had 140,000 USD.
1962 Warren Buffet had 1,025,000 USD
You could argue that you should start counting at 1951 since that was when he had nothing. So let’s say he had nothing in 1951. That means in 11 years he went from nothing to 1 million 1968 dollars. Converting the 1962 dollars to 2006 it would mean anywhere between 6 to 14 million dollars.
When I first looked at that number I was in complete awe, as I did not believe Warren was that GOOD. Tim, sorry, but you are completely wrong on this one. Value investing is actually the better vehicle. Trading is easy come and easy go.
Here comes the question why do traders trade, if value investing makes better money? Easy, trading is quick money. I compare trading to X sports, and value investing to fishing. X-sports are definitely more fun and there is a nice rush. But you can very easily break your arms, die and what have you. And very often traders have shelf lives. It happens because styles go in and out of fashion. With fishing its about being at the right place at the right time. You wait until the fish comes to you, not you to the fish. Fishing is downright boring to many because there is no rush like an X-Sport. Yet both are sports and both have their successes and downfalls. You can go weeks without catching anything.