To be or not to be like Buffett: Financial advisors weigh in

investmentnews.com:

To paraphrase the famous line from “Jaws,” “We’re going to need a bigger moat.”

Shares of Warren Buffett’s Berkshire Hathaway have returned 14% year-to-date, compared with a 15.5% rise for the S&P 500. Over the past 5 years, however, Buffett’s holding company is up 71% compared with the S&P 500’s 53% return. Go back even further, and Buffett’s baby really blows away the benchmark index.

Much of Buffett’s long-term success derives from his ability to identify companies with what he calls “economic moats” surrounding them. Buffett, who turns 93 at the end of August, explained his moat principal at the 1995 Berkshire Hathaway shareholders meeting: “We’re trying to find a business with a wide and long-lasting moat around it, protecting a terrific economic castle with an honest lord in charge of the castle.”

As Buffett describes it, the moat can stem from the company being the low-cost producer in a particular area, having a technological advantage, or it could simply be “because of its position in the consumers’ mind.”

In its 13F filing last week, Berkshire revealed its stock portfolio — worth about $351 billion — comprises 55 positions, with Apple making up nearly half. Other top holdings include long-time Berkshire favorites Bank of America, Coca-Cola and Chevron.

Brandon Rakszawski, director of product management with VanEck, said the VanEck Morningstar Wide Moat ETF (MOAT) was designed to capture the concept of “wide moat” stocks even though Buffett is not affiliated with the fund, which is up 19.5% year-to-date and 69.5% over the past five years.

“He’s served as a bit of an inspiration for Morningstar’s embrace of economic moats and trying to assess whether that company has an economic moat,” Rakszawski said. “So while