Easy Picks: Stocks Suggested by Warren Buffett for Immediate Investment
Warren Buffet, long-term CEO of Berkshire Hathaway, manages an investment portfolio valued at approximately $292 billion. His market excellence over time continually entices investors seeking profitable stocks influenced by his selections.
Though emulating Buffet's success isn't feasible, there are a couple of his investments that are strong choices regardless of your investment preference. Below are two noteworthy options.
1. Amazon
Berkshire Hathaway purchased Amazon (AMZN 2.40%) in 2019 and currently holds a 10 million share stake. Two significant reasons to purchase Amazon include its market dominance in retail and cloud computing.
Amazon claims 40% of the U.S. e-commerce market, far surpassing its main rival, Walmart, with a 7.4% share, according to eMarketer.
Amazon's marketplace earned $95.5 billion in North American revenue during the third quarter (ending Sept. 30), marking an 11% increase. The company's total operating income even rose by 55% to $15.3 billion.
Amazon also thrives due to its first-rate cloud computing business. Amazon Web Services (AWS) witnessed a 19% rise in sales to $27.5 billion during the third quarter, with further growth prospective. AWS is the dominant cloud computing provider with a 31% market share, and Goldman Sachs predicts cloud computing will grow into a $2 trillion market by 2030, driven by artificial intelligence development.
Although Amazon's stock appears pricey, sporting a price-to-earnings ratio of 45, its control over the U.S. e-commerce and cloud computing markets makes it an appealing investment opportunity.
2. Vanguard S&P 500 ETF
Placing an exchange-traded fund (ETF) on this list might surprise some readers, yet the Vanguard S&P 500 ETF (VOO 0.39%) merits inclusion due to several reasons, primarily because Buffet recommends that most investors invest in an index fund.
The S&P 500 index funds track the growth of the 500 largest publicly traded companies on U.S. stock exchanges, which means the index fund benefits when the broader market flourishes regardless of the sector performing. It's among the simplest investing methods.
"In my opinion, the best option for most individuals is the S&P 500 index fund," Buffet said in the 2020 Berkshire Hathaway annual meeting.
Buffet's expansive portfolio includes 43,000 shares of the Vanguard S&P 500 ETF. Suprisingly, one of the world's most successful investors is a strong advocate of S&P 500 index funds due to their superior performance.
Data from Morningstar indicates that over the past decade, merely 29% of actively managed funds outperformed their indexed counterparts. Additionally, they are economical, with the Vanguard S&P 500 ETF boasting a minuscule expense ratio of just 0.03%.
This signifies that for every $10,000 invested, a mere $3 is spent on expense ratio fees. I can personally attest to the advantages of the Vanguard S&P 500 ETF, as it represented a substantial portion of my portfolio for several years.
For investors looking to follow in Buffet's footsteps, it may be more advantageous to adhere to his advice for the majority: invest in an index fund now and maintain it for years.
While emulating Buffet's entire investment portfolio may be challenging, incorporating some of his investments, like Amazon and Vanguard S&P 500 ETF, into one's own portfolio can be beneficial. In 2019, Buffet's Berkshire Hathaway purchased a significant stake in Amazon, profiting from its market dominance in retail and cloud computing. Similarly, Buffet advocates for index funds, such as the Vanguard S&P 500 ETF, as they offer a simple, cost-effective, and often high-performing investing option. By following Buffet's advice to invest in an index fund like Vanguard S&P 500 ETF, one can align their finance and investing strategies with the successful long-term investor.
