Two Over-rated Investment Pros: Ed Lampert and Warren Buffett

As of last week, some say Ed Lampert has now failed to become the 'next Warren Buffett.'

He should have aimed much, much higher.

With the release of Sears' dismal last quarter results, and the plunging price of Citigroup shares, Lampert's investing and operations savvy are both now being called into question.

Thus, pundits who had been thinking that Lampert would soon replace Warren Buffett as the country's most admired investor and quasi-operating business portfolio manager are now looking elsewhere.

It's just my opinion, but I think the pundits should have looked to someone else as the current 'most admired' investor.


In truth, Buffett's company, Berkshire Hathaway's stock has been nothing to write home about for years.

As the nearby Yahoo-sourced stock price for the past five years indicates, Berkshire has barely outpaced the S&P500 Index over the time period. There is no healthy spurt of price appreciation which accelerated Berkshire far away from the returns of the index since late 2003.

And, as recently as a few months ago, it was dead even with the index. As the next Yahoo-sourced chart shows, in greater detail, The S&P was ahead of Berkshire for about two months in the middle of this year. Late September saw the two at parity, meaning that all of this year's advantage in Berkshire's performance may be attributed to just nine weeks.

For an investor, that would be pretty awesome timing- to catch Berkshire just for the prime two-plus months in which it actually bested the market.

Surely America's highly touted, greatest institutional investor can do better than that over half of a decade? Maybe GE CEO Jeff Immelt would better use his time, on behalf of his bereft, performance-starved shareholders, visiting an institutional investment manager with a better record than Buffett?

Now, it seems, Lampert's entanglement with Sears, and his mis-timed Citigroup investments, have sullied his record. And, in his own right, Lampert surely is looking questionable as an investor now.

Of course, he claims that nobody understands his long term investment focus at Sears, nor how long and difficult the turnaround will be.

Maybe so. But the best situation for investors is a consistently superior issue whose returns regularly outperform the market. Not some risky bet that an institutional money manager can magically turn around operating performance at an also-ran retail giant.

Personally, I'd guess that the crown for best, most consistently-superior institutional manager belongs to one of the mid- to large-sized hedge funds. But those are performance results which are harder to come by, at least for free, and difficult to verify.

But it certainly is not Warren Buffett. And it looks like it won't be Ed Lampert anytime soon.