Warren Buffett, the Oracle of Omaha, has a track record that speaks for itself. Since taking the helm at Berkshire Hathaway in 1965, the company’s Class A shares have skyrocketed by over 4,300,000%, translating to nearly a 20% annualized return over almost six decades. It’s no wonder that investors often follow Buffett’s moves to secure substantial long-term gains.
One way to keep tabs on Buffett’s investment strategy is by monitoring Berkshire Hathaway’s quarterly Form 13F filings with the Securities and Exchange Commission.
These filings provide a snapshot of the stocks and exchange-traded funds (ETFs) that Buffett and his team are buying and selling. For instance, the most recent 13F revealed that Berkshire invested over $800 million in a trio of homebuilders — D. R. Horton, NVR, and Lennar — and increased its stakes in Occidental Petroleum and Capital One Financial.
However, these 13Fs don’t tell the whole story. When Berkshire Hathaway acquired General Re 25 years ago, it also became the owner of New England Asset Management (NEAM), a specialty investment company. Although NEAM’s assets are significantly smaller than Berkshire’s, its holdings are part of Berkshire Hathaway, making it effectively Buffett’s secret portfolio.
As of June 30, 2023, this secret portfolio held 101 positions in various securities. Interestingly, the top holding in this portfolio is an investment that Buffett has often recommended to most people: the SPDR S&P 500 ETF Trust (SPY), which mirrors the performance of the S&P 500. This index accounts for nearly 16.4% of NEAM’s invested assets.
Buffett has long been a proponent of investing in America. During Berkshire Hathaway’s 2020 annual shareholder meeting, he advised investors to own cross-sections of the American economy over long periods, suggesting that the easiest way to do this is by purchasing an ETF that mirrors the S&P 500.
He stated, “In my view, for most people, the best thing to do is own the S&P 500 Index Fund… You’re dealing with something fundamentally advantageous, in my view, in owning stocks. I will bet on America the rest of my life.”
The S&P 500’s track record supports Buffett’s advice. Crestmont Research’s data shows that an investor who purchased an S&P 500 tracking index and held that position for 20 years would have generated a positive total return, including dividends paid, 104 out of 104 times. This suggests that time in the market is more important than timing the market.
While the SPDR S&P 500 ETF Trust is a popular choice, the Vanguard S&P 500 ETF (VOO) may be a better option due to its lower net expense ratio. Regardless of the choice, an S&P 500 tracking index can be a solid investment for patient investors.
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