Ask Matt: Should I copy Buffett's stock picks?
Q: Should I copy Buffett's stock picks?A: Imitation may be a sincere form of flattery, but it's not a great way to make money with stocks.
Every quarter Warren Buffett's Berkshire Hathaway discloses its ownership stakes in public companies. Investors pay a great deal of attention to Berkshire's portfolio since Buffett has had a solid long-term track record at picking winning stocks and sticking with them. Most recently Buffett disclosed new stakes in companies, including a new position in telecom Verizon. He also said he's reducing holdings in General Motors.
There's not much of a reason to mimic the moves, though. Most importantly, why mimic Berkshire when you can simply buy the real thing? After years of resisting a split, Berkshire finally split shares of its Class B shares in 2009. The shares trade for about $125 apiece now, so there's nothing to stop you from just buying the company itself. Doing so will eliminate the timing issues that come with coping Buffett. Shares of Verizon jumped 2% the day after Berkshire disclosed its stake.
If anything, investors might use the Berkshire endorsement as a validation of stocks they own already or are thinking about buying. If a stock passed muster with Buffett, it definitely must have some attraction to long-term investors.
USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz
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