As the world’s top investor, people are constantly looking to Warren Buffett for investment advice. A quick Google search will reveal literally dozens of articles listing out something Warren Buffett bought or sold and the ever-present question: “Should you?” It can be tempting for amateur investors and Buffett aficionados to want to leap on those stocks in the hopes of riding Buffett’s coattails to wealth. But that’s not always a good idea.
The thing that people tend to forget is that Form 13Fs are only filed once a quarter. That means once every 3 months, Berkshire reports what it did over that term. There are two main problems with piggybacking off of these reports: first, that information is already 3 months old, and second, the forms don’t give a reason why those stocks were bought or sold.
For example, an investor might sell a stock right after filing, or perhaps the investment was made with the intention of selling higher when the company begins buyback. And while, yes, Buffett is known for playing the long game with stocks, that doesn’t make it a guarantee that he plans to hold on to something for years.
The long and short of it is that you simply can’t tell what the motivations behind a purchase are with any kind of certainty. Instead, those SEC Form 13F filings are best used as sort of a marker and a learning experience. Don’t just jump in blindly, thinking that you’re making a smart investment simply because it’s a stock that Buffett touched. Do your research!
So, the next time that you see an article touting about whether or not you should buy or sell something based on Warren Buffett’s market movements, stop and remember to do your research first. You can certainly bet that Buffett doesn’t make his decisions based on other people.