Here we have one of the world's wealthiest investors advising us regular folk to "don't try this at home." Since he's convinced the average person can't pick stocks as good as he can, he's repeatedly told that average person not to pick stocks.

Instead, he recommends they keep things simple. Pick the market. Buy an index fund.

In this way, Warren Buffett is no different than any other portfolio manager I've talked to. No stock picker worth his salt will admit anyone can pick stocks better than he can.

As far as I can tell, it's really not an ego thing. Anyone who has picked stocks and survived to tell about it knows self-confidence is a prerequisite.

Don't let the numbers in all those annual reports fool you. Stock picking is not a science. It's not wholly creative like an art, either. Rather, it falls somewhere in between. Kinda like psychology. And marketing.

In fact, psychology and marketing deal with the same real-world: human behavior. To understanding this, you need only read the first six letters in "marketing."

The "market" is nothing more than the cumulative result of thousands of humans making individual decisions. Human decision making is just a nicer way to say "human behavior." The market is full of it. And portfolio managers need to swim in that muck every day.

When you swim, you better learn how to stay afloat fast or you're out of the pool. Stock pickers stay afloat by believing in their methodology. The minute they stop believing in themselves, they lose the ability to "see" the market. They become just another one of those faceless thousands of decision makers.

Here's what stock pickers think of those thousands of faceless decision makers:

They don't pick stocks. They throw darts. They may go through the motion of fundamental analysis, but, in the end, they're just moving with the crowd. Indeed, they are the crowd. They lack the discipline to buck the crowd (which is required to make money when buying and selling stocks). And they can't be trusted with managing portfolios.

Consider the implication. If you really believe you're a good stock picker, then you may not even trust other portfolio managers, who also really believe they are good stock pickers. Ergo, when you die, you tell your family to liquidate the portfolio you've managed so brilliantly while you were alive and place all the proceeds in… wait for it… index funds!

This is exactly what Warren Buffett has said.

In the meantime, while he's alive, he'll take care of things himself.

So, where's the potential fiduciary breach?

First off, it's unlikely to occur in one of the companies owned by Berkshire Hathaway. Holding Warren Buffett accountable in this instance is life holding you accountable for something Amazon does to its employees because you own a mutual fund that owns Amazon.

Now, if I understand this whole affiliated companies thing, there may be some nexus where Buffett could be held accountable. Here's the thing, though. Where Buffett could get into trouble is his failure to offer Berkshire Hathaway company stock as an investment option. Why? Because Berkshire Hathaway has clearly done much better than the market over the long-term.

On the other hand, there are issues with ESOPs when it comes to fiduciary liability that may make Buffett feel uncomfortable exposing his wealth to. I don't know. That's between him and his ERISA attorney. And I am neither him nor an ERISA attorney.

I am, however, a practicing fiduciary when it comes to the Investment Advisers Act of 1940. As someone who swims not only in the ocean of portfolio management, but in the turbulent seas of compliance, I can tell you one thing I try to avoid at all costs: telling the public (including the media) what I think about specific investments. And not just stocks, but mutual funds, too.

The last thing I want the shareholders of our proprietary mutual funds to hear is me telling the world to invest in other funds. They certainly makes no sense from a marketing standpoint. It also might have me treading water a little bit too close to the deep end of fiduciary compliance.

Why? Because if I'm telling someone who lives in New York State (where our funds are registered) and whose investments are not limited to 401(k) plans (we've made the business decision not to allow our funds in 401(k) plans) to invest in a fund other than mine, I might get myself in trouble. I say "might" because, as a fiduciary I appreciate this, it may not in that person's best interest to invest in our fund.

But if I make a blanket statement that "everyone" should invest in a fund that's not the one I'm responsible for, it suggests I'm not acting in the best interests of our individual shareholders.

Now that's a fiduciary breach.

And that's the primary fiduciary breach Warren Buffett may have committed by telling people to invest in index funds.

I say "may" because Buffett is on the record saying things that can be interpreted as NOT investing in index funds.

Plus, he has a pretty good track record versus the index.

So, can we cut him some slack for behaving like any other normal portfolio manager?