Warren Buffett’s been investing for nearly 70 years. He’s currently the 5th richest person in the world and has run Berkshire Hathaway, a holding company for a variety of businesses, for the last 50 years.
As one of the greatest investors of all time, we can definitely learn a thing or two from his wisdom. A good place to start is seeing how and where he’s investing in 2024.
Buffett filed his most recent portfolio changes in November, showing us where he’s investing for the start of this year.
His portfolio covers a wide range of sectors, including energy, information technology and finance, holding some big household names like Apple Inc, Coca-Cola, Bank of America and Mastercard.
Which sectors is Buffett investing in?
Source: Berkshire Hathaway 13F Filings, 15/12/23.
This article isn’t personal advice. Investments will rise and fall in value, so you could get back less than you put in. You should choose investments based on your own objectives and attitude to risk. If you're not sure if an investment is right for you, ask for financial advice.
What does Buffett’s portfolio teach us about investing?
1. Diversification
Buffett would be one of the first to tell you, investing success is about building a diversified portfolio. If you hold a big enough mix of investments, hopefully you should always have something working in your favour.
Buffett, with the help of the late great Charlie Munger, and his team of experts and analysts have built a diversified portfolio over the years. Through running Berkshire Hathaway, Buffett’s invested in a variety of sectors, countries, and different sized companies.
When building your own portfolio, a good place to start is by using the global stock market as a rough guide. You can then decide if you want to invest more in some areas, and less in others.
The US makes up the lion’s share of the global stock market (almost two thirds). Compare this to the UK, which only makes up around 4%.
But nearly 40% of the global market isn’t in the US.
Holding a range of investments across different countries helps make sure you’re well diversified across the board.
Breakdown of the global stock market
Source: FTSE Russell All-World, 15/12/23.
2. Time
Share prices and stock markets can often overreact to short-term noise. Investors’ emotions can come out and share prices can move away from what the company’s really worth. The difference between price and value is essential for investors.
When markets seem to be taking a turn for the worst, it’s important to hold your nerve and think long term – that’s at least five years when investing.
Only buy something that you’d be perfectly happy to hold if the market shut down for ten years.Warren Buffett
Buffett didn’t become a billionaire overnight. Investing is a test of nerve and knowledge, and experience which you just can’t buy.
The choppy waters tend to smooth out in the long run and looking at Buffett’s portfolio, this is no different.
Despite owning a wide mix of companies, Buffett’s Berkshire Hathaway has seen its value fall by more than 30% six times between 1979 and 2019 – in early 2000 Berkshire lost 44%.
Investors need to remember it's all about time in the market, not trying to time it. Holding your nerve in the tough times and staying invested in a diversified portfolio over the long term is the key to investing success.
3. Reviewing your portfolio
Like Buffett, every investor should be checking in on their portfolio, making any tweaks to holdings and making sure it still fits their long-term strategy.
We think twice a year is sensible, or once a year at the very least.
Investment ideas to get you started in 2024
There’s no better time to start investing than right now. Putting these lessons into practice could be one of your new year’s resolutions.
Investing in lots of different individual shares can be expensive, and hard to manage when you don’t have the luxury of a team like Buffett’s helping you.
One of the best ways of diversifying a portfolio is through funds. They’re an easy way to invest in different sectors, investment styles, and different parts of the world.
Our experts have picked five for the new year.
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Article image credit: Mint/Getty images