Berkshire Hathaway and The Pitfalls of Performance Chasing

Berkshire Hathaway and The Pitfalls of Performance Chasing By Eric Crittenden

Berkshire Hathaway has been one of the most lucrative investments of the last 40 years.

But during the tech bubble of the late 1990s, Warren Buffet’s investment strategy underperformed the market by as much as 60 percent. Many began to question whether the Oracle of Omaha had lost his way in the “new economy.”

By maintaining a disciplined approach, Buffet allowed the market’s irrational exuberance to outpace him in the short run. But he knew he had a winning strategy for the long run.

There’s a hard lesson to learn here: even the best investments will endure extended periods where their strategies simply don’t perform.

When investors try to outthink and overtrade the market, they...