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The Closest You Might Get To Investing Like Warren Buffett

TedTed
in Fund Discussions
FYI: Who wouldn’t want to invest like Warren Buffett? His investments have long beaten the performance of the S&P 500. Plenty of mutual fund and hedge fund managers have tried to do the same. But most fail. That’s why mere mortals should stick to low-cost index funds.

Some people, however, enjoy the added risk of trying to beat the market. If you’re one of them, let me offer a suggestion: There is a simple method with a market-beating record. It doesn’t win every year or even every decade. But its long-term record has beaten the U.S. market index. It takes about ten minutes a year, combining two investment styles from Warren Buffett’s biggest mentors.
Regards,
Ted
https://assetbuilder.com/knowledge-center/articles/the-closest-you-might-get-to-investing-like-warren-buffett

Comments

  • PBKCM
    Dogs of the Dow is an early rules-based strategy. Quant has come a long way since then.

    I ran a simulation back to Jan 1999. One-year holding periods, rolling on a weekly basis. So 938 "years" were tested.

    Dogs of the Dow (5 lowest priced Dow stocks from top 10 Dow yielding stocks) averaged 8.63% per year return vs 6.85% for SPY. Dogs beat SPY 57% of every year tested.

    But the standard deviation from holding just five stocks was higher. So the average Dogs Sharpe and Sortino ratios were lower than SPY. And average Dogs max drawdown was higher than SPY.
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