The One Thing Warren Buffett Can’t Predict

 

Warren Buffett is often called the “Oracle of Omaha” or the “Sage of Omaha.” While there is some doubt on where the nickname came from, the implication is obvious: Buffett’s success is almost precognitive. In fact, his company has beaten the S&P 500 consistently for around 50 years. There’s no doubt that Buffet is good at what he does.

But, despite his immense success, the one thing that Warren Buffett has openly said that he cannot predict—and indeed would not really want to predict—is market movements. He has highlighted this in multiple interviews and shareholder letters, including in the 2014 letter, where he told shareholders he had no idea where his company would be in a year.

“Since I know of no way to reliably predict market movements, I recommend that you purchase Berkshire shares only if you expect to hold them for at least five years. Those who seek short-term profits should look elsewhere,” Buffett wrote.

That might seem like a strange thing for someone like Buffett to say, but the truth of the matter is that while you can look at a stock and evaluate its possible potential, one of the things that no one can reliably predict is the short-term market movements. It is for this reason that Buffett is so focused on long term investing.

“I never attempt to make money on the stock market,” Buffett explained. “I buy on the assumption that they could close the market the next day and not reopen it for five years.”

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