Buffett, now 96, is standing down as chairman of Berkshire Hathaway. He handed over the CEO reins last December.

If you're a fan of investment legend Warren Buffett (and who isn't?), this is as good a time as any to sell the stock of his investment vehicle Berkshire Hathaway.

And to move your money instead into five stocks that Buffett himself has praised extravagantly, and which he thinks resemble Berkshire $(BRK.A)$ (BRK.B) in its early days.

Buffett himself, now 96, just stepped down as Berkshire Hathaway chairman, though he will remain on the board as a director. He had already handed over the reins as chief executive to hand-picked successor Greg Abel at the end of last year.

Berkshire's longtime vice chairman Charlie Munger, Buffett's Svengali, died at age 99 three years ago.

Without the dynamic duo in charge, you could argue that Berkshire is just another very big company. But then it already was.

Shocking to say, but Berkshire Hathaway's stock has actually not outperformed the broad S&P 500 Index SPX in about 30 years. Don't believe me? Check out the chart below, from FactSet, which shows the total return on Berkshire Hathaway relative to (i.e., divided by) the total return of the S&P 500, which you can own through a low-cost index fund.

A few things stand out. Berkshire, a conglomerate of high-quality businesses with a strong balance sheet, has outperformed dramatically during periods of extreme market stress. Look at the spikes - relative outperformance - during President Donald Trump's ill-fated "liberation day" fiasco early last year, or during the global financial crisis of 2008-'09. Going further back, the stock also did much better than the S&P 500 during the stock-market slump of the early 2000s, and even the Asian financial crisis of 1998. (But see too the massive underperformance during the dot-com bubble of 1999-2000, when Buffett famously refused to join the insanity and the stock got shunned.)

Yet the overall trend is sideways. Actually, during every market panic of the past 30 years, you were better off selling Berkshire and buying the S&P 500 than doing the reverse.

That is an astonishing reversal from Berkshire's glory days during the 1970s, 1980s and early 1990s when it crushed the overall market by a wide margin.

What changed? Simple. Size. As Buffett himself pointed out repeatedly, the bigger Berkshire Hathaway got, the harder it was for him to find market-beating investment picks big enough to move the needle. In the mid-1990s Berkshire was valued at around $50 billion. Today it's about $1.1 trillion, or more than 20 times as much.

The company is sitting on a cash pile of about $366 billion. That's a good cushion in a downturn, but it's also a sign the leadership can't find acquisitions big enough and good enough for them to buy.

You could argue that's not just a Berkshire thing, but a U.S. stock-market thing. The entire market has become so expensive, by so many measures, that one-way bets, the investments Buffett liked to call "fat pitches," are hard to find.

It's worth adding that Buffett has arranged for his estate to be invested in a low-cost S&P 500 index fund after he has gone. (Which, naturally, we hope won't be for many years to come.)

The best case for not selling Berkshire right now is if you think we are going to have another stock-market meltdown sometime soon. Berkshire, as usual, will probably outperform if that happens. Then again, if you expect that, you might not own any stocks at all.

Yet if you think selling Berkshire stock means abandoning Buffett or Buffettism, think again. That's because you can switch your money into five mini-Berkshires that are much smaller, have much more room to grow and which have been endorsed by Buffett himself.

I'm talking about the five Japanese conglomerates, or "trading houses," in which Buffett has been investing for six years. All have American depositary receipts traded on U.S. exchanges, meaning you can buy the stocks easily through your brokerage account, and can even own them in a tax-sheltered account such as an IRA.

Those stocks are Itochu $(ITOCY)$, Marubeni $(MARUY)$, Mitsubishi $(MTSUY)$, Mitsui $(MITSY)$ and Sumitomo $(SSUMY)$.

Berkshire Hathaway owns about 10% of the stock of each of these five companies. Buffett, in one of his last messages to stockholders as CEO, praised them to the heights, saying they were high-quality businesses, very good value and Berkshire-like in their capital discipline.

He, and Greg Abel, say these aren't opportunistic investments. They are classic Berkshire picks: super long term.

The stocks of all five have been terrific investments since Berkshire first bought into them, about six years ago. As this chart shows, they have outperformed Berkshire by a wide margin during that time (as well as the markets).

The Japanese trading houses' stocks have easily beaten Berkshire Hathaway's since it invested in them in August 2020.

Showing, once again, that Buffett hasn't lost his touch, even in his 90s.

Yet even after this outperformance they remain reasonably priced, at least in relation to many other stocks. They are priced between 13 and 16 times forecast per-share earnings for the next 12 months, and around 1 to 1.2 times forecast revenues. (The S&P 500, for reference, currently trades at 3.2 times sales).

U.S. investors in foreign-owned stocks will have to deal with exchange-rate fluctuations. Yet this risk should be viewed in context. Stocks are so-called "real" assets, so a decline in the currency may be offset by a rise in the price. And the yen is already very cheap against the dollar by historic measures.

Meanwhile, their total market capitalizations range from around $55 billion for Marubeni to about $115 billion for Mitsubishi, according to FactSet. Ironically, they are too small to move the needle for Berkshire stockholders. Berkshire's cash pile is so huge that it had to agree to limit its investments.

But that doesn't constrain individual investors. What would Warren do?

-Brett Arends