Are you thinking of which stocks to buy? Why don’t you try to get ideas from the investing legend Warren Buffett, and completely copy his portfolio worth 213,610,727,154 USD?
There is no doubt that Warren Buffett is the most successful investor in the world. His company, Berkshire Hathaway, has the highest stocks share in the New York Stock exchange. Every last investment he makes is always available online for anyone who cares to copy his investment.
Copycat investing is the strategy of replicating the investment ideas of money managers or famous investors. It is also known as coattail investing.
But, is copycat investing a viable investment tactic? Its success is slightly diverse, but there are several techniques you can use to become a perfect copycat investor.
GuruFocus tracks the stock picks and portfolio of the world’s successful investors, such as Warren Buffett, George Soros, Carl Icahn, Mohnish Pabrai, and others. It is based on the idea that successful investors can make far fewer mistakes.
On the other hand, Canadian Couch Potato provides useful guidelines for building a well-diversified portfolio using suggested index funds. They provide several recommendations about identifying your own financial goals, time, and risk tolerance.
Copycat investing is more extensive than you think. The idea of mimicking someone’s investing ideas seems to catch the attention of many investors as the results seem to be foolproof. Why? Because you only copy the trading ideas of famous and recognized investment professionals.
You should consider replicating investment ideas from the following sources:
You need to ask yourself these:
It’s not surprising that many investors want to copy Mr. Buffett’s portfolio. They want to learn from him and understand his methods.
Anyway, how good are you to copy a target portfolio?
Experts say that several factors will limit your ability to encounter the same returns from your investment.
People need to consider their susceptibility to risk. They also have to remind themselves that they are a world away from the daily affairs of billionaires like Warren Buffett.
Additionally, most of your investment decisions will not be covered from tax weights.
Here are the suggested solutions while implementing a copycat investment strategy:
While copycat investing has its risks, the solutions mentioned above can help you become a perfect copycat. Define your objectives and the constraints you can work on to build a portfolio. Successful money managers, buy-and-hold managers, and activist investors are also a great source for copycat trades.
If you are determined to give copycat investing a go, there are ways to do it wisely. Be sure to practice your own due diligence and understand exactly what you’re investing in. Build an adequately diversified, index-based portfolio, and ensure that the copycat strategy’s investments don’t compromise your overall asset allocation.
But how easy is it for an investor to be like Warren Buffett?
The short answer is that they can imitate his general investing strategy. Still, most will find it challenging to replicate him in practice. There is a saying that if you cannot beat him, then join and follow him!
Here are the two rules by Warren Buffett when it comes to investing:
Rule no. 1: Never lose money.
Rule no. 2: Never forget rule no.1