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Always Do Your Own Analysis

I would like to share a great article that I had just read with all investors. Many gurus, seasoned investors always warn new investors to do their own analysis and research. Reading and referencing other people's work is fine, but, one must always know his own position and do complete analysis. As in the case of people who blindly follow Warren Buffett into Goldman Sachs and General Electrics in the 2008 crisis.

Taken to Task: The Cult of Warren Buffett

By Aaron Task | Daily Ticker – 9 hours ago

Bank of America stock jumped over 9% Thursday on news that Warren Buffett is making a $5 billion investment in the bank. But, at $7.65, the stock closed more than a $1 below its high of the session and BofA shares were falling anew Friday morning, trading as low as $7.45 before stabilizing...
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Moreover, investors who've followed Buffett into investments like Goldman Sachs and GE got burned, assuming they adhered to Buffett's dictum about "forever" being the best holding period. The rest of us didn't get the big dividends Buffett earned and both stocks are currently trading below the levels when Buffett made his "confidence-boosting" investments in 2008, Goldman by 12% and GE by 37%.

Read more here:
http://finance.yahoo.com/blogs/daily-ticker/taken-task-cult-warren-buffett-163825709.html

What the followers (those who followed WB into GS and GE deals in 2008 crisis) failed to do was to consider everything. WB has a extremely good cushion of 10% per annum return on his capital with and option to purchase shares at certain price. If condition is no good, he is still profitable. Those followers would never get such deals. In reality, small money cannot follow big money. You need to play at different playing fields.

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