Who would’ve thought that private investors would be watching intently the investment decisions of a 93-year-old in 2023? That’s the reality though, as the world’s most successful investor, Warren Buffett, continues to have retail traders watching his every move – especially in these uncertain economic times.
With question marks still hanging over the US Federal Reserve and whether its interest rate hiking cycle is over, investors are looking to embrace the volatility and find the next big opportunities going into 2024 and beyond.
Buffett’s Berkshire Hathaway Inc. holding company, which he’s chaired since 1965, is one of the most valuable companies listed within the S&P 500. That’s due to some sizeable and successful partial shareholdings in major stocks through the decades. As one of the top ten most valuable equities by market capitalization in the S&P 500, it’s no surprise that when the Berkshire Hathaway share price moves significantly, so too does the S&P 500 futures chart ahead of subsequent trading sessions. That’s because most hedge funds and retail traders view Berkshire Hathaway as a bellweather for sound investing in the American economy.
With that in mind, let’s take a quick look at the companies currently dominating the Berkshire Hathaway portfolio, which could help to influence your own decision-making in the US stock market.
The so-called “Oracle of Omaha” [Buffett] continually extolls the virtues of holding Apple stock. He has 915 million shares in Apple, which comprises almost half (46.3%) of Berkshire Hathaway’s entire market capitalization. Buffett adores Apple as it’s maintained an unrivalled market share and is a world-renowned brand.
Now looking forward to its future performance after its App Store, Apple Music, Apple Pay, and iCloud offerings have had a profit margin of 71% in Q2 2023.
Bank of America (BAC)
Bank of America is comfortably the second-largest stock holding by Buffett and Berkshire Hathaway. He holds over a billion shares in the bank, which is worth well over $29 billion at today’s market value. Despite Buffett selling off several bank stocks in early 2023, Bank of America remains a core component of the Berkshire Hathaway portfolio.
That’s likely because of the belief that consumers are more likely to withdraw their money from regional and local banks during times of economic uncertainty in favor of the biggest banks which the Federal Reserve and US government simply couldn’t allow to fail.
Although Buffett admits he was a keen Pepsi drinker for half a century, his eventual love of Cherry Coke inspired him to acquire over 400 million shares in Coca-Cola. This is around 7% of Berkshire Hathaway’s entire portfolio.
Buffett’s investment in Coca-Cola is another vote of confidence to invest in recognizable brands. In fact, it’s considered the best-known and most valuable non-alcoholic drink brand on the planet.
American Express (AXP)
Buffett invested in American Express shares for the first time in 1991 and hasn’t looked back, investing multiple times through the 1990s. As with Coca-Cola, American Express amounts to almost 7% of the total Berkshire Hathaway portfolio.
Buffett has been insistent in the past about the status of American Express and its dominant market share in the credit card market.
The mantra with Buffett has long been brand strength and a healthy balance sheet. It’s something that’s stood him in good stead for almost 60 years and Berkshire Hathaway continues to go from strength to strength.