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Have your own opinion. That was Jim Cramer's lesson to investors who were burned by Warren Buffett's moves on the stock market Wednesday.
"I've long been a believer in doing your own homework and finding your own comfort level with individual stocks," said the "Mad Money" host.
That means it is a bad idea to blindly piggyback on the investments made by anyone, let alone Warren Buffett or even Jim Cramer. And if you are an investor who is not willing to do the homework on individual stocks, then Cramer recommends investing in an index fund.
"I love index funds. They allow you to eliminate what's known as single stock risk," he added.
It's not like Warren Buffett has a crystal ball.
In fact, the Berkshire Hathaway chairman and CEO would be quick to tell you he doesn't know what the stock market is going to do tomorrow, next month or next year.
Although the man known as America's greatest investor has said he doesn't believe you'll make money trying to sell stocks on a daily or weekly basis, many investors closely follow Berkshire's new investments, seeing them as a vote of confidence by Buffett.
But if Berkshire builds its stake in an agricultural equipment company such as Deere, should you buy it? Berkshire dumped shares in Exxon Mobil as oil prices plummeted. Should you have done the same?
"Would I follow him? No. But would I read what he does? Absolutely," said New Jersey-based financial advisor Patricia Powell. "His strategy is extremely long term."
Warren Buffett's Berkshire Hathaway on Tuesday disclosed a 5 percent stake in agricultural equipment maker Deere & Co. and said it shed a $3.74 billion investment in oil company Exxon Mobil as oil prices plunged.
The changes were among several that Berkshire made in its common stock investments in the fourth quarter, according to a U.S. Securities and Exchange Commission filing detailing the conglomerate's domestic equity investments as of Dec. 31.
Berkshire began accumulating the bulk of its 17.1 million-share stake in Deere, worth $1.51 billion at year end, in the third quarter of 2014, but had not previously disclosed it. The SEC often lets Buffett quietly accumulate large stakes to deter copycats.
Deere shares rose 1.2 percent in after-market trading.
The stock market index fund Warren Buffett picked in a bet continues to outpace a collection of hedge funds seven years into the 10-year wager.
The latest standings in Buffett's bet with the money managers who own Protege Partners were reported Tuesday by Fortune magazine. Buffett made the bet in 2008 to demonstrate how hefty fees can hurt investment returns.
The Vanguard S&P 500 Admiral index fund Buffett chose is up 63.5 percent since the bet began.
The five funds of hedge funds Protege picked were up roughly 19.6 percent.
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A charity of the winner's choosing will receive at least $1 million. The money both sides put up is invested in Berkshire Hathaway, and it is now worth roughly $1.7 million.
Some of Warren Buffett's big stocks bets have tanked in 2014, and the market hasn't let it pass unnoticed. In fact, anytime a stock Buffett owns declines, the "billions being lost" by Warren makes it into the headlines.
With all the fuss over Warren Buffett's stock-picking prowess, or lack thereof, you might think Berkshire Hathaway has suffered mightily. You'd be wrong, though—way wrong. In fact, Buffett has plenty of reason to smile: Berkshire Hathaway is crushing the S&P 500.
Go big or go home seems to be Warren Buffett's mantra when it comes to philanthropy.
The Berkshire Hathaway CEO and legendary investor made the single biggest charitable donation this year, giving $2.1 billion to the Bill and Melinda Gates Foundation in the form of 16.6 million shares of his company, according to Wealth-X's ranking of the 10 largest philanthropic donations of 2014 published on Wednesday.
On Monday, 84-year-old Buffett surpassed Mexican business mogul Carlos Slim to become the world's second richest person as shares of Berkshire Hathaway rallied to an all-time high. Forbes said its real-time ranking of the world's billionaires now estimates Buffett's wealth at $74.4 billion, about $1.5 billion more than Slim's $72.9 billion. Slim is now in third place.
Warren Buffett is now the world's second-richest person as Berkshire Hathaway's stock rallied to an all-time high.
Forbes said its real-time ranking of the world's billionaires now estimates Buffett's wealth at $74.4 billion, about $1.5 billion more than Carlos Slim's $72.9 billion. Slim is now in third place.
Class A shares of Buffett's Berkshire Hathaway closed at a record $227,800 after hitting an all-time intraday high of $229,374 in Monday's trading. They're up 28 percent for the year, trouncing the S&P's 11.5 percent gain, excluding dividends.
In March, Forbes estimated Buffett's fortune at $58.2 billion. He was No. 4 on the list at that time, behind Mexico's Slim with $72 billion and Spanish fashion executive Amancio Ortega with $64 billion.
In an SEC filing Friday afternoon, Berkshire said it held 40 million GM shares as of the end of the third quarter on Sept. 30.
That's an increase of 21 percent from the almost 33 million shares it owned three months earlier on June 30.
The additional shares are worth more than $223 million at GM's current price. The full stake is valued at almost $1.3 billion.
That's surely a sign the Buffett isn't all that confident about P&G's long-term future.
P&G, the global beauty and home products maker, added about $1.8 billion in cash to the deal. That values Duracell itself at about $2.9 billion. Buffett could presumably have just given P&G stock worth that amount and kept the remaining shares. Instead, he unloaded all 52.8 million shares and, like someone using a dollar bill to buy a 75 cent candy bar, got some change back.
As Sanford Bernstein analyst Ali Dibadj told Reuters, "I don't take it as a good sign that Buffett would rather own Duracell than P&G."