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Hopefully, the title of this column has attracted those of you who know that I am a big fan of the Oracle of Omaha. Warren Buffett is one of the best investors of all time, and even at the sharp age of 83, he can still outperform anyone. Perhaps recommending that you "ignore" Buffett's investment is a little too strong of word -- maybe "disregard" is a better term.
My point is that no matter how talented he is, Warren Buffett today is working with billions and billions of dollars that need be allocated each and every year. That is a very difficult process, working with such large sums of money. More so, Buffett's investment menu is reduced. As a result, he has to stick to making big moves, such as putting $10 billion into IBM (IBM)
I would presume that both IBM and Exxon Mobil will turn out to be acceptable investments. Both are dominant businesses in their respective fields, and they generate healthy cash flow. But it is highly unlikely that Exxon Mobil shares will double in the next four to five years, given the company's current market cap of $400 billion. In the past five years, Exxon Mobil is up 41%.
There is a simple unwritten law of money: The more money you have to allocate, the lower your hurdle has to become under ordinary circumstances. That's why, during the highly unusual environment of 2008 and 2009, Berkshire put over $20 billion to work in a manner of months into names such as Goldman Sachs (GS)