Peter Lynch and Warren Buffett got screwed

Should I feel good about this, or bad because I bought a share of BRK.B recently?

From the Motley Fool:
"But in September 2008, Peter Lynch also had the ignominious honor of holding bothAIG (NYSE: AIG) and Fannie Mae (NYSE: FNM) in his personal portfolio -- as they dropped 82% and 76%, respectively, during that month alone."

Warren Buffet in the meantime:
The dumbest, he said, was buying a large amount of Conoco Phillips stock when oil prices were near their peak and in no way anticipating the dramatic drop in prices that subsequently occurred. Buffett said he still thinks the odds are good that oil will sell in the future at much higher prices than the $40 to $50 per barrel now prevailing. But even if prices should rise, he said, "the terrible timing" of the Conoco purchase has cost Berkshire several billion dollars.

A couple things, the prediction about higher oil prices mirrors what a wide assortment of other experts think. Pretty much the only guy I can think of who thinks otherwise is podcaster John C. Dvorak, who made one good bet by shorting oil at $135 a barrel.

Do I put a sell stop on Berkshire? Even though I'm down about $500, I think I better.

Sangoma

I bought $5,000 worth of Sangoma at $1.24. It was a KeyStone recommended stock. Like most of Keystone's picks, it got hammered even harder than the index and its currently languishing at $0.45.

Its trading within a well defined range, and it is a solid, profitable company. The problem with trading this thing back and forth is that the amount of money is no so low that commissions are now going to eat brutally into any profits I make.

Ugh.

Well, its a trading market, but I won't be too aggressive. I will put a trailing sell stop order on this turkey when it hits $0.50. They had a good first quarter earnings report, hopefully combined with Bernake shutting up for 5 minutes will lift this to the top end of its trading range.

The Brick Group

I like MoneySense Magazine. Its conservative. It's Canadian. It revers Warren Buffett and Benjamin Graham.

Last year they published a list of the top income trusts in Canada. I began buying these early in 2009. My picks included:

• Boralex Power Fund
• PennWest Energy Trust
• The Brick Group
• InnVest REIT

The Brick Group was the most interesting. I bought at 2.07 a share when it was paying well over 20% dividends. As it climbed up during the January market rally, I followed Andrew Horowitz's advice, use sell stops.

I was very aggressive, using a trailing 5% sell stop. This caused me to unload everything at 2.50. Then the stock climbed and climbed and climbed. Fairfax Financial was buying into The Brick big time.

The stock hit $3.00 a share and I was sad.

Then Brick decided to cut all distributions immediately.

Bloody hell! The stock plummeted to $1.30. I would have been killed if it were not for those stops. I expected a distribution cut of maybe 50%, not a blood bath of 100%.

Lessons here:

• Use sell stops
• Individual stocks are fucking risky. Maybe if I had a brain I would be using ETFs
  
• Fairfax Financial isn't as smart as I originally thought
• I hate the market

Reading

Here are the book's I've read and will be rereading soon:

1. The Warren Buffett Way
   
2. The Disciplined Investor
3. The Intelligent Investor (chapters 8 and 20)
4. Beating the Dow with Bonds

The trick with this will be writing everything down in a fashion that will serve as a checklist to review before buying a stock, and a way to review whether to buy or sell that stock in the future. (or put in a sell stop)


Here are the daily sites to read:

1. The Disciplined Investor
2. GuruFocus.com
3. globaleconomicanalysis.blogspot.com
   

A challenge appears

God I hate the stock market. But no more, time to make this thing my bitch. Time to figure out who has beaten the market, then become their disciples.

Warren Buffett - the classic. Problem is, Berkshire has been utterly clobbered recently. Just buying and holding it may not be enough. Also, as Andrew Horowitz points out, he is more of a business man, he has the leverage to do things normal investors cannot. And he can speak to the CEOs directly and they will listen.

Andrew Horowitz - aka, The Disciplined Investor. I like this guy for two reasons:

1. He's friend's with John C. Dvorak, of whom I am a great fan
2. He's made money during 2008

Horowitz offers many tips on how to prosper: hedging, short selling, and his own special voodoo called quanta-funda-techna. We are currently in a trading market, Mr. Horowitz may offer the best advice on how to profit from the market.


Mike Shedlock - aka, globaleconomicanalysis.blogspot.com. I like this guy for two reasons:

1. He's friend's with Andrew Horowitz
2. He's made money during 2008

I'm considering adding a fourth man to this group:

Michael O'Higgins - author of How to Beat the Dow with Bonds. He saw the crash coming and I presume positioned himself accordingly. I must get a copy of his book and learn what he knows. It is quite possible, however, that he could be a Peter Schiff type character, a person who say 2008 coming, but still suffered horrendous losses.

I'm off to read "The Disicplined Investor" and see what Mr. Horowitz has to each.