'Buffett really was not a great stock picker': Financial researcher Larry Swedroe on how investors can emulate the billionaire investor
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Larry Swedroe, who is considered one of the market's most esteemed researchers, thinks Warren Buffett's investment style doesn't work well anymore.
He cites the number of professional Wall Street firms and hedge funds now participating in the market.
«Warren Buffett was generally considered the greatest stock picker of all time. And, what we have learned in the academic research is Warren Buffett really was not a great stock picker at all,» Swedroe told CNBC's «ETF Edge» this week. «What Warren Buffett's 'secret sauce' was, he figured out 50, 60 years before all the academics what these factors were that allowed you to earn excess returns.»
Swedroe indicated index funds can help investors trying to mimic Buffett's performance.
"[Investor] Cliff Asness and the team at AQR did some great research and showed that what you accounted for the leverage Buffett applied through his reinsurance company. If you bought an index of stocks that had these same characteristics, you would have matched Buffett's returns virtually," said Swedroe. «Now today, every investor can own through ETFs or mutual funds the same types of stocks that Buffett has bought through companies that apply this academic research — companies like Dimensional, AQR, Bridgeway, BlackRock, Alpha Architect and a few others.»
Swedroe is the author and co-author of almost 20 books — including «Enrich Your Future — The Keys to Successful Investing» released in February.
In an email to CNBC, he called it «a collection of stories and analogies… that help investors understand how markets really work, how prices are set, why it is so hard to persistently outperform through active management [stock picking and market timing,] and how human nature leads us to
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