Invest like a Buffet

Invest like a Buffet

Warren Buffett, natural raconteur, Chairman of Berkshire Hathaway and leading philanthropist is one of the poster boys of finance, investing and capitalism. He is perhaps the most revered and quoted sage on market trends, corporate governance and compounding over time and deserves all the credit his fans bestow for the market beating leadership of his conglomerate over the past fifty or so years. However this little exercise in investing analysis is centred on the gastro economic phenomena rather than the similarly titled Oracle of Omaha. By all means think Dairy Queen and Coca-Cola but also add in a hotel ballroom with rows of different dishes from cuisine around the world, in this article we want you to look at investing like it’s a buffet, the banquet variety!

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The first rule of a buffet is that you want to have fun and not be intimidated by new things. At a buffet you can try dishes you have never been brave enough to make your main on menus gone by. Likewise you can try rarer items or expensive items with ease since everything has been laid out in front of you. Never tried oysters before? The buffet is your friend. Want to experiment with cheese, kale and avocado in the same omelette? A buffet is the best time to try it! Can’t decide which desert you want and instead would like ten miniature cakes? The buffet lets you try the whole desert trolley without feeling sick at the end of it! When it comes to investing in securities you lose nothing by at least researching and studying as many listings as possible. From the comfort of your own home or on the go via a smartphone you can explore ETFs, LICs and businesses across the spectrum of private enterprise. It doesn’t need to take over your life and savings, it can just be a little bit of fun visit the sushi station before flying all the way to Japan

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Another reason why buffets are so popular is because it encourages you to sample a broad and often eclectic basket of flavours. My wife likes to visit every different station and create a plate per area worth of items to pick through. Whether it be the salad bar, seafood station or pasta bar she likes to exit having left no chafing dish unexplored. As such her risk of anyone zone altering her enjoyment is reduced. Whilst one or two plates might be underwhelming the chance of leaving hungry is extremely low. Likewise if you diversify across asset classes – for instance having some stocks, some bonds and some property trusts you reduce your chances somewhat of excessive losses since you are spreading your exposure across different vehicles which will enjoy somewhat heterogeneous trajectories. Likewise at a buffet you also further diversify within the pizza table and get a slice of a number of different pizzas rather than concentrating all your energies on the Hawaiian as you might do on a Friday night. Similarly with securities you often benefit from selecting a range of fixed income ETFs rather than relying on any one to have the returns or the liquidity you dream of.

Buffets also typically have a slightly different atmosphere than your typical dining experience. The amount of walking around and queueing doesn’t appeal to everyone and there is an extent to which it can be less relaxing than being waited on your table. But one of the beauties of a buffet is the democracy of it all and the extent to which you might feel free to ask questions. What are meats in the carvery? Did you like the pasta? Where can I find the brown rice? Whether it be of your friends and family or the attending staff it is an environment without pretension or excessive etiquette. When it comes to financial services, whether it be as a consumer or as a professional perhaps we can learn something from this spirit. Feeling like you can ask anyone anything, no matter how trivial or complex is a strong frame in which to operate. Just as at a buffet you invest to enjoy an experience rather than to suffer in silence and should use every chance to pick the brains of those serving you.

Finally buffets are a culinary example of where you can truly be yourself. You can eat lightly from a range of cuisines or leave in a state of bloated regret having filled up on bread and butter. You can sample new dishes or prioritise what you know you’ve enjoyed in the past. It’s your buffet and very few people will leave having built a dining experience with the same weightings of dishes. The same is really the case when it comes to investing, certainly in listed securities. For all the advice, professional expertise and research you can consume there is very little chance your positions will be exactly mirrored by anyone else. Based on when you arrive, when you leave and what takes your fancy in between your experience is often unique to you, investing like a buffet leaves you with a different outcome to your spouse, your siblings and your friends. In the investing world we all start with different competencies, interests, salaries, savings and existing assets, and do our best to improve our overall position today and for the future. When it comes to money comparing lifestyles and spending patterns can often lead to disappointment, especially if Instagram is your sampling source. But when it comes to culinary preferences we are at peace with the notion that we all end up liking different things and different isn’t always better. Investing over ten, twenty or even fifty years will create different yields, growth, losses, comfort and stress, however you choose to proceed. Embrace your own character with all its flaws, try to make the best of your own meal ticket and don’t spend too long worrying what’s on another person’s plate!

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