Both are buy and hold strategies that buy additional shares during market corrections. Compounding and tax minimization are a goal of both. The performance of both are among the greatest investors of all time. Both have drawdown although Stars is larger. Both investments are available to the investor. Both Warren and Stars believe an S&P ETF is a great holding for the investor. Neither has a view on market direction.

The main differences are in two areas – stock selection and performance. Warren uses his extensive knowledge of industries and companies to pick stocks that represent good value and generate cash flow. Stars uses two cap weighted ETFs to select the stocks that are continuously being improved by incrementally buying what is rising the most and selling what is falling in price.

Over the recent years Berkshire Hathaway’s performance was kept equal to the S&P by owning 50% APPL. This means the other 50% value stocks were underperforming by about 12% per year. Warren has known beating the S&P is very difficult since 2008 when he bet the hedge fund industry that they could not beat the S&P after commissions.

Stars outperformance of the S&P is due to rebalancing a volatile ETF against a less volatile ETF. In a rising market the increased volatility produces outperformance. In a correction the ability to purchase many more shares of the volatile ETF at cents on the dollar produces outperformance.

An investor can learn a lot about how to make money from these two approaches.