Does Copying Buffet work?
I understand that not all companies in Berkshire's portfolio are public and that the quarterly filings don't give the most updated view of the portfolio.
Notwithstanding that, I am curious about a portfolio made of Berkshire with additional holdings in Berkshire's components that are trading for less than Berkshire's entry price. i.e. if berkshire bought ulta at $385 and now it's trading at $369 go overweight that stock, would compare over the long-term.
Thoughts?
i really don't understand why anyone would copy buffett today. anyone telling me that i immediately dismiss their investing ability
to be clear - buffett is a GOAT-level investor. but he controls $500bn of capital and is massively constrained by taxes and size.
buffett's edge is finding great opportunity that the market missed. read the LP letters in the 50s/60s/70s, if you told buffett prime your best investment strategy is to copy a $500bn fund that is well respected he would think you are a moron
I hear that, what do you think about a portfolio of Berkshire component companies but with the weighting reversed i.e. holding your largest stakes in the companies with the smallest market cap/position in brk.
That way you can get much more exposure than buffet can given the difference in the investment amounts.
The smallest cap companies in BRK are still relatively large. Buffett's advice for years has been to invest in high-quality small and micro-caps if you have a smaller account. But as soon as you get into the $3-400mm AUM range, it gets really hard to continuously do that.
why? who cares what buffett owns. half of the stuff he bought ages ago at 1/100th of the current price and everything is still large cap
young buffett would do the opposite of everything you are suggesting - following someone else, not doing own research, and constraining yourself to very well known names and stocks that were higher growth 20-30 years ago instead of growing today (e.g. the banks)
Lmao. No. Buffet's strategy worked really, really well for many decades but has not outperformed in past 15yrs. This is despite how flexible he's been as an investor if you consider he started with cigar butt style investing. He is absolutely a massive inspiration, but I doubt if you made him young and malleable again he'd tell you the starting place would be where he is now. He'd adapt to the current conditions and build from there
He also has permanent capital, which almost no one else does. It's not apples to apples
S&P is an incredible benchmark these days with the composition (vs. 30yrs or even 20yrs ago). You're not going to beat it doing stuff that is consensus
I agree with what you say about Buffett.
I didn't understand your point re the composition of S&P500 do you mind explaining?
Also, why do you think S&P 500 is not 'consensus' it's the largest passive tracked index and works based on a rigid methodology so not sure why it should be considered impossible to beat at least a few bps a year.
feel like this entire thread is a troll
No, Buffett's strategy now is just size and cost discount from said size. There's a reason the federal gov didn't go to joe schmo to bail out BofA but went to Buffett instead. Ofc Buffett got a nice little sweetheart deal that wasn't available to anyone else. There's a reason he hasn't outperformed lately, because 1) he had the first hedge fund thru GEICO (portco composition is very very different from literally all the other insurance portco), 2) he was one of the first mover in the golden age of American economic expansion post WW2 (all ship up with rising tide & all that), 3) if Buffett was so successful who are the modern day Buffett? sure you can name a few names but none approach Buffett's level of growth because of aforementioned reasons. Why hasn't anyone been able to replicate the success of Buffett using his strategy? It's because the material conditions to Buffett's success no longer exist.
What is it that people say about monkeys throwing darts and stock picking? Yeah, we found the lucky one-in-8-billion monkey that's modestly good at darts. Yes, this is a very very contrarian view but he got in early because he was born early. Remember time in the market is better than timing the market. Who's the oldest investor out there? oh right... our favorite nonagenarian.
Kenny is my goat 💗
The real lynchpin of Buffett’s strategy was leveraging insurance float to buy stocks and private companies. Would be very hard to do today with mega cap private equity bidding up the value of the float.
No, you're going to underperform and get taxed to hel
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