Cigar Butts and Moats

How to implement a Buffett-inspired fund strategy.

by John Coumarianos

Financial advisors and consultants are always giving themselves intellectual hernias trying to figure out which mutual funds work well together in a portfolio. Everyone’s looking for funds that all do well over time but take different routes to good long-term returns, thereby providing the entire portfolio with stability along the way. In this piece, instead of trotting out the rules of Modern Portfolio Theory, we’ll review the two segments of Warren Buffett’s investment career and suggest funds that should work well together based on their correspondence to those segments. Basically, choosing two funds, each one corresponding to each equally successful major part of Buffett’s career, should produce a well-diversified domestic stock portfolio.

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