It seems that everyone is attempting to invest like Warren Buffett in recent months. To be fair, there are worse investors to mimic than the ‘Oracle from Omaha’.
The S&P/ASX 200 Index (ASX: XJO) is down 17% in 2020 amid the coronavirus pandemic and a Saudi Arabia-Russia oil price war. Broad market share price falls can present the perfect opportunity to try your hand at value investing, but there are some drawbacks.
So, before you dive in and try to invest like Warren Buffett in 2020, here are a couple of things to consider.
Not everyone can invest like Warren Buffett
There’s a reason Warren Buffett is a billionaire. Apart from the fact he’s been investing since his younger years, he’s also been perhaps the greatest value investor of our time.
If everyone could invest like Warren Buffett, they would! It’s easy to say why ASX 200 shares have climbed after the fact, but it’s much harder to predict where they’re headed. Even if you think you know, the final step of investing your hard-earned cash is often the hardest.
While there are definitely buying opportunities amongst ASX 200 shares right now, it can be risky to start stock picking on a whim.
Trust your investment strategy
The current climate could be a great time to invest like Warren Buffett but it’s not without its challenges. ASX 200 share prices have been extremely volatile in recent weeks. There’s a good chance that investors have oversold and overbought many companies amid the pandemic panic.
Furthermore, it’s also hard to pick stocks for long-term value. No one can accurately forecast the next 6 months, let alone the next 5 years. That means finding undervalued ASX 200 shares with long-term prospects could be beyond your average investor.
I think a pandemic is the worst time to change your investment strategy. And anyway, you’re not investing like Warren Buffett if you’re buying and selling in the short-term. I believe the best way to navigate any share market storm is by sticking to your tried and true investment strategy.
There’s no point having an investment strategy if you change it at the first sign of trouble. This means that while you could invest like Warren Buffett in 2020, sticking to your original plan is likely to payoff in retirement.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.