Warren Buffett significantly added to his position in Apple (AAPL) during the first quarter of 2017… and his timing looks suspiciously like he’s been following our work here at TradeStops.
I’m referring in particular to the Doubling Up on Your Winners strategy that we introduced last year. In this strategy we add to our winners by buying more when they go up by 2 VQ’s (i.e., two TradeStops Volatility Quotients). You can read all about it in the link to the article above…
Adding to winners is a counterintuitive strategy. In fact it only it occurred to me to look into such a strategy because for over a decade now I’ve watched investors lose money over and over again by adding to their losers.
I hear all the time about investors who double down on a losing stock in the hopes of “getting back to break-even” faster. Even experienced investors do it, like hedge-fund billionaire Bill Ackman who doubled down on Valeant Pharmaceuticals (VRX)… and got killed.
I thought to myself, “Who doubles up on their winners?”
That question started a research project which resulted in our findings that adding to winning positions after 2 VQ’s of gains could consistently boost portfolio returns.
It appears that Warren Buffett has been reading our research.
Buffett recently added significantly to his position in Apple… and he did so after Apple gained about 35% to 40% from Buffett’s original entry price.
Why is that significant? Because the VQ on Apple at the time of Buffett’s original investment was about 18.6%. Our “doubling up on your winners” strategy would suggest that Buffett add to his Apple position after it gained 37% or two times the original VQ.
Here’s how Buffett’s purchases line up on a chart.
Is Buffett reading our research here at TradeStops? We’ll probably never know if he is.
What’s pretty clear, however, is that great minds think alike. Adding to your investments after 2 VQ’s of gains… after your investments prove that they are worthy of even more of your investing capital… will put you in rarefied company.
