Warren Buffett Warns ‘The Sophisticated Have an Edge Over the Innocents’ In Investing, But Reveals How Even Retail Can Beat Wall Street

One of Warren Buffett’s most understated observations about markets cuts uncomfortably close to the truth. While discussing how stock prices move relative to intrinsic value, he noted in his 1996 shareholders' letter that when shares trade back and forth between investors, “generally, the sophisticated have an edge over the innocents in this game.” It wasn’t a moral judgment. It was a warning. As then-CEO of Berkshire Hathaway (BRK.B) (BRK.A), Buffett was describing what happens when market prices drift ...