The modern Buffett may seem slow to folks like Jim Cramer, 65, whose net worth is $100 million. Note: He’s paid to critique Warren Edward Buffett, age 89, who has a personal net worth of $80 billion — all of it from investing. He made most of his money in the 1990s from a far less debased dollar and an economy not inflated by the Federal Reserve.
Perspective: When Warren Buffett was 65, he was worth $10.7 billion. That’s $18.1 billion in 2020 dollars. (That’s 189 Jim Cramers that Warren Buffett could have bought and sold at the age that Cramer is now.)
The Oracle’s mistakes are better than Cramer’s wins. Let’s take a look at Warren Buffett’s stock market activity.
Warren Buffett’s Stocks
The Berkshire Hathaway Inc portfolio holds around 50 stocks. Buffett is actually a practitioner of strong, concentrated moves into stocks after sufficient due diligence. Here are a few of his largest holdings by percentage:
- Apple (NASDAQ: AAPL): Berkshire Hathaway’s largest holding by percentage (around 35%), Apple is one of Buffett’s most famous head fakes. Buffett once famously said that he stayed away from tech because he didn’t understand it. Apple’s notoriously cost-efficient process and accessible products apparently changed his mind.
- Coca-Cola Co. (NYSE: KO): Coca-Cola was one of Buffett’s major plays in the 1980s. He bought over 6% of the company in 1988, a stake worth more than $1 billion. At the time, it was his largest position. He continued to hold it although famously saying in 2018 that the company “doesn’t look as good as it did 5 or 10 years ago” because of consumer backlash against sugary drinks. Society apparently reversed itself, and KO has returned more than 1,800% for Berkshire with consistent growth and 2 stock splits.
- Wells Fargo (NYSE: WFC): Buffett began buying shares of Wells Fargo in 1989 and the move stands as a testament to how allegedly fraudulent business can thwart even the best investor. If you got in WFC after its rotation of scandals began in 2016, you lost money. Buffett had been reducing his shares in the banking sector — Wells Fargo was not doing well just before 9/11 and fell more than 10% in the previous 2 quarters in 2011. Buffett stepped in with a 9.7 million share purchase at that time around $28.53 per share. At present, Wells Fargo trades below that level.
- Amazon (NASDAQ: AMZN): Buffett caught a lot of flak for missing out on most of the trillion-dollar rise of Amazon, but it wasn’t even the Oracle that initially pulled the trigger. It seemed as though Buffett learned from his weaknesses and was smart enough to let someone else in the office handle the tech sector. The bet continues to pay off nicely as Amazon rises past $3,000 per share and a $2 trillion market cap.
- Teva (NYSE: TEVA): No investor is perfect, and Teva Pharmaceuticals is one of Buffett’s black eyes. Biotech certainly brought back great returns for investors during COVID-19, but Teva was one of the supposedly established companies that lost investors’ money. Accusations of dirty dealings plagued the Israeli pharmaceutical as well. As a result, Buffett reduced his stake in 2020.
- Suncor Energy (TSX: SU): Buffett actually grew his stake in Suncor as he reduced his holdings in Apple, a move that might surprise the modern investor. Buffett is from a more industrial age of stocks, and Suncor was on sale at the time. The company specializes in crude oil, giving Buffett good placement to profit from uptakes in Canadian energy output.
- Restoration Hardware Holdings (NYSE: RH): Restoration Hardware has been one of Berkshire’s best performers during the COVID-19 crisis. Buffett praised the company for its efficiency before announcing his investment. Restoration’s luxury furniture business coincided with new attention on home furnishings during social distancing.
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Warren Buffett’s Investment Strategy
Don’t let that cute octogenarian smile fool you. Buffett is a ruthless investor who is not above using his influence and dollars to move the market. During the darkest days of the financial crisis, with Goldman Sachs in the direct crosshairs of the SEC and public disdain, Buffett poured $5 billion into the bank to become its largest shareholder.
All of Buffett’s moves may not make sense for the average investor. He got creamed in the media for “selling at the bottom” of the airline divestment. Far fewer outlets reported on his $40 billion profit from Apple holdings.
Buffett selling out of airlines and freeing up billions in capital isn’t the same as regular investors selling out of airlines and losing a few thousand. Buffett’s research into company fundamentals is legendary. Today, each investor has access to investment tools reserved for elites in Buffett’s younger days, meaning that almost anyone can participate actively in the American economy.
At the same time, Buffett’s investment philosophy is known as “value investing”, meaning that he’s looking for long-term gains over short-term cashflow. Remember, this is something that his firm can afford to do, but you can also scale your investment objectives and budget.
Learn from the Best
The greatest investor of our time isn’t done yet, and there are plenty of things that we could learn from him. The first lesson is not to copy him.
Knowing what stocks Warren Buffett buys will only help you to the extent that you are doing the same thing that Warren Buffett is doing. Are you searching for the next Amazon or are you speculating on penny stocks? If you’re just scalping your top stocks under $5 or swing trading your lunch money for fun, then open access to the Berkshire Hathaway portfolio does you no good.
Decide who you are as an investor to decide what part of Buffett’s philosophy will drive your market activity. You can’t have the whole enchilada. Ask for a bite. Make sure it’s the bite with the ingredients you like!