As a guest host on Bloomberg TV today, Ken Fisher decided to bash Warren Buffett as not being a very good portfolio manager. It was a bit surreal to say the least and it was not an accidental comment. Ken is very bright and I doubt that he ever says anything that he hasn’t thought out fully. But for the life of me, I still cannot figure out why he chose to go down this path. Maybe he was on a roll after taking a few condescending shots at David Tice’s ability to be a profitable short seller next year, but it was odd nonetheless. Ken’s point was that Buffett is not a great portfolio manager. On its face, that is a useless comparison - I have never heard Buffett referred to as a portfolio manager. “The Greatest Investor of All Time” is the main tagline that comes to my mind and the difference between an investor and portfolio manager is obvious. It went deeper than a simple comment and as his justification, Fisher pointed out the average performance of BRK/A in the past few years, the repetitiveness of the annual Buffett letter, the lack of detail on Berkshire investments once they are brought in, the large number of private companies he buys without public info to evaluate, blah blah blah. As I said, I think Ken is a smart man and has made some significant contributions to investing and behavioral finance, provided good results for his investors, writes interesting articles for his Forbes column, etc. etc. And as he is oft to mention, Ken is in the Forbes 400, number #297 to be precise. However, he is not in the Forbes 2 and I doubt that the guy in that spot would ever feel the need to comment on Ken Fisher as a great investor, great portfolio manager or anything else for that matter.  Buffett may not be a great portfolio manager but I think there are quite a few great portfolio managers that would suggest that he had something to do with their success.

“The market that never sleeps”… “the most heavily traded market in the world” - it all sounds so exciting. Forex must be getting really popular with all the commercials running on CNBC during the trading day and all the infomercials at night. Maybe foreign exchange trading is a great opportunity for individual investors, but I doubt it. For good reason, currency trading has been largely offlimits to individual retail investors. Now, with the advent of the Internet and broadband connectivity, the world is literally at your fingertips. The various trading platform companies will try tempting you with pitches that say no commissions, highly lenient margin trading, profit potential in bullish or bearish markets, and low account minimums. Of course, the downsides are not quite as fun to talk about.

HEDGEfolios is only focused on equities, but that isn’t why I am negative on trading forex. I am all for diversification and using multiple asset classes to achieve that goal. However - diversification only works if you do not lose money in the process of buying the alternate investment class. My concerns about forex trading are based upon the unbelievable complexity and the very low probability that one individual can compete with the pros that are out there. It’s not good enough to be great with technical analysis or have a great trading platform. You really need to be an expert in geopolitics and political risk, economic conditions and growth rates in each country, relative inflation and interest rates, foreign trade figures, foreign bond yields, international monetary policies, foreign central bank decisionmaking, and a host of other macro factors. It’s way too tough for any one person and you are competing with teams of professionals with extremely sophisticated technology that are moving multi-million dollar trades in seconds.

Warren Buffett via Berkshire lost about $1 billion in 2005 on a bad bet against the US dollar. Even George “The Man who Broke the Bank of England” Soros has lost a few gazillion pips every once in a while. But they are supported by tremendous resources, staff and experience - they will live to fight another day. I wonder whether most forex traders on the various trading platforms will be as fortunate!?! After the tech bubble burst, we heard a lot of sob stories from daytraders that lost their family fortune and family life sitting in front of the computer all day. Forex trading will likely provide its own tragedies and I really would prefer not to hear them.

Fraud risks abound and here is a warning by the Commodity Futures Trading Commission (CFTC), the federal agency that regulates forex trading in the United States. To be honest, I don’t think this info is going to stop the real money loss in this area because that will likely come from legal trading. And before I get barraged with emails telling me success stories of the forex multi-millionaires, I recognize that some people can actually make money doing this. I am happy for them.

If you are so convinced that you need to diversify with forex exposure, you have a few other options rather than trading currency pairs. You can purchase the Rydex or Powershares currency ETFs which also concern me but not quite as much due to the fact that they are professionally structured. However, my preferred method is to evaluate an actively managed fund by experts like Axel Merk. It may not be as exciting as trading yourself, but I think it has a better chance of making money while diversifying your portfolio.

Every election period we get barraged with the message that politicians are primarily responsible for the economy and the markets. Who can forget “It’s the economy stupid” and all the sentiment that encompasses? It’s almost as if we should assume that companies are run by the President, Senator, or Representative and not the voters. If the economy is bad, the out-of-power party attempts to tag the incumbents with all the blame. If the economy is good, the incumbents try to take all the credit - except this time it isn’t working. In this election, the Republicans can try all they want, but the economy and the markets are not resonating with most voters.

Of course, I don’t believe the merits of any of these claims. The economy is run by voters and except for a few macro issues or specific trade policies, I think the impact of politics on our business climate is grossly exaggerated, especially at election time. For the most part, it’s a great vote-getting tactic for the masses who love to place all the responsibility for their lives in the hands of the government. I do buy into the impact of taxes on consumer behavior and their trickledown effects on the economy, but that is about it for me. I choose to believe in capitalism and have great faith in producers and consumers to determine the course of our business success or failure. I know that may seem ignorantly unAmerican with all the brainwashing going on during the campaign ad blitz, but I am sticking with it.

Even more ridiculous is the debate about which party is better for the market. Each side points to certain bullish periods in the market history and spins that they are the cause of the gains. We also get studies that attempt to show what combination of control works best for the market such as split Congress with Democrat president or one-party dominance like the past few years, etc. etc. Some suggest that the market loves gridlock in Washington DC and in my opinion, all this theory is a waste of time.  I hope that none of these massaged statistics will influence your vote. There are so many political issues to evaluate that actually mean something - please focus on them.

The last time I checked, very few politicians were known for being great investors. I’d love to vote for Warren Buffett, but he isn’t running. On the other hand, I don’t find Bill Frist’s questionable HCA trades, Hillary Clinton’s cattle future investment, Harry Reid’s Nevada real estate windfall, or any number of politician investments to be inspiring. Their investing “prowess” wouldn’t encourage me to vote for them or against them. It’s funny, but I vote for politicians based upon their political beliefs, not their investing beliefs or the mistaken belief that they will help or hurt the market. Once again, I just want to remind everyone that voters buy and sell stocks. Maybe we do it with a hint of the political aspects such as capital gains tax or dividend taxation, but I doubt that it is ever the sole reason we are willing to buy a stock, even pharma or big oil. If I am wrong on all this and the market is just a puppet for one politician or another, VOTE ME OUT!

“Mr. Sunshine” - I got that one from my former boss and it wasn’t because of my sunny disposition towards the market. Oh well, I have been called a lot worse. I recently watched CNBC’s “Fast Money” and while I liked the show in general, I get tired of hearing all the nicknames (The Risk Doctor, The Admiral, The Negotiator, The Lone Wolf). I guess it’s just part of the game at CNBC - home of “The Brain” and “The Money Honey” but it really strains the credibility of their content. To me, nicknames should only be reserved for the greatest in their profession like sports stars Babe Ruth and Magic Johnson and when you say their nickname alone, you should immediately know who is being discussed. In the investing world, some of the most famous have had nicknames such as Warren “The Oracle of Omaha” Buffett and Alan “The Maestro” Greenspan and I wish it would stay limited to a select few. But since it appears to be catching on, you should really come up with one of your own, just in case you are asked to appear on CNBC!