[danteembermage]

I think the key here is that you are "buying" stocks rather than "trading" stocks. If you invest Warren Buffet style you make a significant investment in a company you think is a good value and you never sell. Thus, your transactions costs are exactly the same as someone buying a broad market ETF and you have more fun at the expense of a little diversification for a while. But once you get to 15 stocks you're basically diversified as long as you didn't industry clump.

So, the only reason not to trade is that you should expect to do exactly as well as the market and pay a bunch of transactions costs which makes you strictly worse off, but the Buffet approach doesn't pay more than you would have anyway.

A point not mentioned is that individual investors can have planning horizons 3 to 50 years long while a lot of Wall Street money is on a 3 month put up or shut up investment time frame. Strategies that take a long time to mature are tough to do when you can get performance-fired for not having your thesis pan out fast enough. You don't have that restriction with your own money.

[charleslmunger]

>but the Buffet approach doesn't pay more than you would have anyway.

https://www.google.com/finance?q=NYSE:BRK.A

[danteembermage]

Sorry, maybe I wasn't being clear. When I said "Doesn't pay more than you would have" what I meant was "Doesn't pay more [transactions costs e.g. fees and bid / ask spread] than you would have [had you just pursued an indexing strategy" In that light the current price of Berkshire Hathaway isn't particularly relevant because even if I just bought Berkshire stock I would still pay the spread. In fact the current B/A spread on BRK.A is 183218.7-174644 = 8574.7 which is considerably higher in percentage terms than a stock with more volume. Of course that's probably exactly how Uncle Warren wants it given he's let the price go so high with out a split.