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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Buffett letter offers advice to investors



 (The Spokesman-Review)
Meg Richards Associated Press

NEW YORK – One of the most widely read dispatches in the investment world may be Warren Buffett’s annual letter to the shareholders of Berkshire Hathaway. In this year’s edition, the man known as the Oracle of Omaha offered two tips for small investors: Don’t overtrade, and don’t abandon ship just because everyone else is jumping.

Looking back over the past 35 years, Buffett noted that American business has delivered terrific results, which should have made it easy for investors to earn juicy returns. But for many, it hasn’t been so simple. “All they had to do was piggyback corporate America in a diversified, low-expense way,” Buffett wrote. “An index fund that they never touched would have done the job. Instead, many investors have had experiences ranging from mediocre to disastrous.”

Buffett blamed investor missteps on three factors: high costs, often because investors trade excessively or spend too much on management fees; poor decisions based on tips and fads rather than solid research; and untimely exits from investment positions, usually after periods of stagnation or decline. “Investors should remember that excitement and expenses are their enemies,” he told shareholders. “And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.”