Have you ever wanted to start investing in the stock market, but been afraid of the potential risk? Are you as financially savvy as a monkey?
If you can answer yes, then two Mays Business School graduates have devised the plan for you. The formula is simple: buy what Warren Buffett buys.
According to research by Gerald (Jerry) Martin ’79 and John Puthenpurackal ’02 (both Mays finance PhDs), investors would have earned an annual return of 24.6 percent by buying the same stocks as Buffett after he disclosed his holdings in regulatory filings, even months later. The S&P 500 rose 12.8 percent a year in the same period.
CNBC and Bloomberg interviewed Martin, an assistant professor at the American University in Washington and a visiting professor at Mays, and Puthenpurackal of the University of Nevada, Las Vegas, about their findings. Their paper, entitled “Imitation is the sincerest form of flattery: Warren Buffett and Berkshire Hathaway,” is currently available through the Social Science Research Network (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=806246).
For more coverage of this story:
New York Times: http://www.nytimes.com/2007/12/29/business/29buffett.html?_r=3&ref=business
LA Times: http://www.latimes.com/business/la-fi-berkshire12dec12,1,7883937.story?coll=
Chicago Tribune: http://www.chicagotribune.com/business/chi-wed_berkshire_1212dec12,0,3695478.story
Categories: Research Notes