If I Copy the Investment Portfolio of Warren Buffett, Will I Also be as Successful as Him?

If I Copy the Investment Portfolio of Warren Buffett, Will I Also be as Successful as Him?

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.

You can get ideas from websites like GuruFocus and Canadian Couch Potato.

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.

How to be an Excellent Copycat?

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.

Who Should You Copy?

You should consider replicating investment ideas from the following sources:

  1. Kelly Ho, a financial planner at Vancouver’s DLD Financial Group Ltd., she says that there’s never one-size-fits-all. You are not supposed to put all your eggs in one basket. Even Warren Buffett’s portfolio is rebalanced regularly. And because of that, Mr. Buffett is doing so well; Ho copies what he’s doing.
  2. Ryan Kerr, co-owner and Financial Planner at Astrolabe Financial Group Inc., states that Warren Buffett is not worried about his plans and investments. He buys undervalued companies and keeps them until he feels these are overvalued. And that’s amazing!
  3. Lynn Williams, chief executive officer and owner of the Lifestyle Protector, says that the incredible success of Warren Buffett has come after his lifetime of investing.

    You need to ask yourself these:

    • Do you have the skill and discipline to understand your copycat’s investment strategy and asset allocations?
    • Are you able to measure performance and rebalance while ensuring you don’t trigger an unfavorable tax event?
  4. Gerald Martin and John Puthenpurackal are the authors of Imitation is the Sincerest Form of Flattery: Warren Buffett and Berkshire Hathaway. They say that the stock portfolio of Warren Buffett (1976-2006) has beaten the S&P 500 by an average of 10.75 percent a year.

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.

What are the Best Solutions?

Here are the suggested solutions while implementing a copycat investment strategy:

  • Follow the reliable and successful experts.
    Stick with the tried-and-tested money managers and copy a timely investment into something that could juice up returns for any investor’s portfolio.
  • Practice patience.
    Chasing a stock is not a good idea. The best plan is to wait for it to come back within your range. If it does not meet your desired price, move on to something different.
  • Look for growth.
    Look for stocks where investors have commenced accumulating significant positions as these signals their confidence in a turnaround.
  • Watch professionals in various sectors.
    Diversify your strategy by replicating investment ideas from experts in different areas.
  • Manage your own plan.
    Don’t expect that copying from the best investors excuses you to do your due diligence. Ensure that copycat stock is suitable for your investment objectives and risk tolerance before you acquire it. In the end, you will always have the final say.

Come to think of it...

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

About the author

Hi I'm Jeff Kiefer and this is my blog. I've been in the Internet Marketing industry for over ten years now, and I would like to share all my experience, insights and other fun stuff with you guys!

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