Jake's View | Don't write off Warren Buffett, despite recent failures of judgment

Warren Buffett's failure to beat the stock market in four of the past five years has raised the issue of whether Berkshire Hathaway's 83-year-old iconic chief executive has lost his touch.

It's a funny thing about people whose advice on the stock market is worth following that those who get it consistently wrong are more reliable than those who get it consistently right.

At a big investment bank I worked for we had a New York economist who liked to make market calls as well as put out reams of the usual Fed-watching blather. On Asia, at least, we never knew him to be right.

We valued his advice highly. If he said it was going up, sell it. It was sure to go down. If he said it was going down, jump in with both boots. It was sure to go up. Sadly, he eventually left us for a job in academia, or was it government? Same thing, really. But it was a loss. We never again had so reliable an indicator in Asian markets.

Warren Buffett is of a different class. He is the sort of guru who consistently gets its right. My rule in these matters still applies, however. Those who consistently get it right never do so quite as consistently as those who consistently get it wrong and now Mr Buffett has hit one of those slippery patches that prove it true.

I think the gurus who consistently get it wrong do so because they are utterly conventional in their thinking, and conventional thought in financial markets is already always in the price. I shall withhold judgment on the Marxist dictum that the truth is always revolutionary but there is certainly something to be said for it being non-conventional, at least in forecasting share prices.