Snap Judgment: When to Trust Your Instincts, When to Ignore Them, and How to Avoid Making Big Mistakes with Your Money

31. Using CEO Behavior for Investing

Warren Buffett once said, “The best CEOs love operating their companies and don’t prefer going to Business Round Table meetings or playing golf at Augusta National.” Investors should identify companies with this sort of CEO as opposed to ones where the CEOs write a lot of books proclaiming how great they are. Alternatively, investors can short the stock of companies where the CEOs are obviously flawed. The warning signs are the CEOs who are making too many acquisitions, are spending time on the book (and golf) circuit rather than at their desks, and finally are holding way too many options until expiration, indicating they are overconfident to the point of not being prudent with their own finances. Ulrike ...