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In the late 1960s Warren was searching for both quantitative bargains and companies with excellent qualitative features.
But, in 1967, he was having great difficulty finding them. He was stymied by the weight of speculative actors moving the market.
He is fed up with the fashion for speculation.
There were millions of people now punting on shares, looking for short term gains.
He has a particular distaste for the idea that you do not need to examine the company in which you are investing, merely have “knowledge” of future market movements.
There were “growing ranks of professional (in many cases formerly quite docile) investors who feel they must “get aboard””.
He refused to participate:
“We will not follow the frequently prevalent approach of investing in securities where an attempt to anticipate market action overrides business valuations. Such so-called ‘fashion’ investing has frequently produced very substantial and quick profits in recent years. It represents an investment technique whose soundness I can neither affirm nor deny. It does not completely satisfy my intellect (or perhaps my prejudices), and most definitely does not fit my temperament. I will not invest my own money based upon such an approach – hence, I will most certainly not do so with your money.” (October 1967 letter to partners)
Silly short term performance measurement.
To go along with a belief in divining short-term market ……..
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