The lesson for regular mortals is not to imitate Warren Buffett; that makes no more sense than trying to play tennis like Roger Federer. Each of them has an inimitable skill. If you lack Buffett capabilities, you will get chewed up as a stock picker.
These master investors don’t have to worry about the competition, since few others possess the complementary skills for their types of investments. We all need to understand, as best we can, our limitations when it comes to the stock market.
But one option for an investor who does not have the skill to compete in a particular area is to ride the coattails of someone who does. Today, through public filings, media coverage and reports written by fund managers, the average investor can quickly learn where the big investors are placing their money.
Of course, who you follow matters. You’d have done far better jumping on the coattails of Buffett than on the coattails of Bernie Madoff. On the other hand, investors with a short time horizon may not be well suited to following Buffett’s patient style of investing. But while picking the right coattails to ride may not be as simple as it might sound, if you get it right the odds are it will produce a pleasing outcome.
To illustrate the process, Investopedia revealed in September last year the 13F filing made on August 14 2019 by Buffett’s Berkshire Hathaway. From this, we see that in the quarter ending June 30 2019, Buffett increased his positions in Amazon (11%), Bank of America (3.5%), US Bancorp (2.5%) and Red Hat (1.2%). We also see that Berkshire reduced its position in Charter Communications by just under 5%.
"All other positions in Buffett’s portfolio were unchanged," said Investopedia, "reflecting his generally stable investment style."
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