Your Slice of the Pie – William Meyer



Last month we considered some of the advantages of following investment “stars”.

In this article I outline some practical considerations when implementing this strategy.

The first problem to resolve is to choose the experts you are going to emulate. They should have performance records which are regularly published and copies of the portfolios they manage also need to be readily available. Long term investors are best as it is going to be more tricky to follow short term traders who change their portfolios on a daily basis, for example, Warren Buffett has core portfolio holdings which have not changed for decades.

When you have chosen one or two managers, stick with them and do not change horses in midstream.
If the “star” Manager you are following runs a unit trust or a hedge fund you may decide to simply invest in that fund. This will save a lot of time and administrative bother.

If you decide to go it alone and construct your own personal share portfolio after studying the portfolios of your “star” managers you will need to check that your information is not out of date and that your “star” investor is not selling to you the shares you are buying. Unfortunately, many “star” investors know that their decisions are copied and will therefore make portfolio changes at the beginning of a new reporting period to keep their decisions unpublished for longer – to put it more simply – famous investors will try to keep their decisions secret for as long as possible.

So, how do you overcome this obstacle? You will need to carefully peruse the financial press – especially small notices (the smaller, the more valuable) – and also study all stock exchange notices about significant holdings. Financial papers and magazines also publish details of all directors dealings in shares. Directors dealings are also published as a matter of course by stock exchanges.

This investment strategy is simple and effective and can you imagine the returns you would have garnered had you followed Warren Buffet over the last forty years.