The next time you are told that a big name investor buying a stake in a company means that it’s safe for you to buy that stock or the industry or the market, please remember these recent examples:

• Warburg Pincus agreed to invest $1 billion into MBIA. 10 days later MBI is worth 30% less.
• Bank of America invested $2 billion in Countrywide preferred on August 23rd. 4 months later CFC common is worth 63% less.
• Joseph Lewis had his 7% position in Bear Stearns disclosed on September 10th. A little more than 3 months later and BSC is worth 16% less.

There are many more examples that have appeared during the second half of this year including a few Buffett rumors. The media loves to sensationalize these events and suggest that if the smart / rich guys are buying, then apparently so should you. One more time - YOU and I are not these guys.   They have capital and patience most of us do not possess.  Investing is a personal experience and we should never buy or sell anything simply because someone else is doing it. Maybe it makes for a good trade in the short term, but as for investing, not so much. I don’t place the blame on the big name investors or suspect they are trying to sucker someone in by publicizing their positions. They have become successful for all the trades you never hear about. But when it comes to high profile investors making high profile investments, please remember that it is no endorsement and doesn’t guarantee a positive return.