One of my favorite secrets about investing is how to find great companies that are on sale. It’s so simple and it’s amazing that more people don’t do it, but they don’t. The secret is that we are going to coattail or copy the best investors in the world.
Coattail Investing: What We Look For and How We Find Great Companies on Sale
When we use coattail investing strategies on the best investors, we want to look and copy the people who we know have made enormous rates of return over 20 and 30 year periods of time.
Some examples of these types of investors are, Warren Buffett, David Einhorn, and Bruce Berkowitz to name a few.
If you had invested $1000 dollars in Berkshire Hathaway, in the year 1970 you would now have $4.86 million dollars in 2014. So following what Buffet is doing works pretty good.
How to Coattail Investors to Help Find the Best Stocks to Buy
How do you do it? How do we coattail the best investors? What is pretty cool is that investors who manage more than $100 million dollars have to file what they bought and what they sold every quarter with the SEC. All you have to do is look it up. It’s free information.
Find out what investors you want to copy and then go to the SEC website and look at what they are buying and selling every quarter.
They have to file every 90 days, so check to make sure the price of the stock is still around what they paid for it. If you like the company, which is very important, apply the 4Ms and make sure it’s on sale and then get in there and buy it.
Warren Buffett’s Stocks Over 30 Years
There was a study done at the University of Nevada that started in 1976 for 30 years. They found that If you had bought what Warren Buffett was buying, the month he said he was buying it, on the last day of the month, at the worst price of that day and you sold it the month it became public he said that he was selling, you would have compounded money on that 30 year period at 24% per year. That’s pretty stunning.
Learn more about how to invest like Warren Buffett during my Transformational Investing Webinar.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.