Diversifying and yet concentrating portfolio
In my opinion, Warren Buffett's investment strategy is all about diversifying your investments but putting your money on a company with a proven track record of making money and long-term growth prospects is worth putting all your eggs in one basket. Despite investing in over 50 stocks, Buffett has heavily concentrated his investments on a few winners.
Buffett's investments are heavily concentrated to what extent?
1. Almost all of his assets are in one stock, which is Berkshire Hathaway.
2. His top five holdings account for 75% of his stock holdings, with Apple alone accounting for 41.5%.
3. Apple is the stock that Buffett has held the most since he started investing, with a 490% growth in stock price since he first bought it in 2016. With more and more shares and Apple's continuous growth, the proportion of Apple in Berkshire Hathaway's portfolio continues to rise.
4. Buffett began investing in Chevron in the fourth quarter of 2020. Although the large oil company has returned almost 170% since he bought in, it is much smaller than the return he earned from Apple.
5. Buffett's largest purchase of Apple occurred between 2016 and 2018. However, he continues to buy more Apple stock to this day.
6. Berkshire Hathaway began a new position in Bank of America in the third quarter of 2017. However, the total return on Bank of America since its purchase is less than 70%.
7. Two of the top five holdings (American Express and Coca-Cola) have been held for over twenty years.
8. Buffett has earned high returns from Coca-Cola since he first acquired it in 1988. However, over the past 30 years, he has not earned as much from Coca-Cola as he has from Apple.
It is important to note that while Buffett has heavily concentrated his investments in a few stocks, this strategy may not be suitable for all investors. Investors should carefully consider their own risk tolerance and investment goals before making any investment decisions. Additionally, it is important to remember that past performance is not a guarantee of future results, and investors should always conduct their own research and seek the advice of a financial professional before making any investment decisions.
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