Picture supply: Getty Pictures
Billionaire investor Warren Buffett has delivered many phrases of investing knowledge over the previous few many years. Usually, his strongest have been the only.
As an illustration, in his 2021 letter to Berkshire Hathaway shareholders, Buffett wrote these 4 key phrases: “By no means wager in opposition to America.”
For the reason that aptly-named Oracle of Omaha mentioned that, a man-made intelligence (AI) revolution has unleashed a tidal wave of innovation and funding. Nvidia alone has added practically $3trn to its market capitalisation — greater than the complete London Inventory Alternate!
Any investor who had heeded Buffett’s phrases 4 years in the past and acquired into an S&P 500 tracker could be up over 60% with dividends. For the tech-driven Nasdaq 100 index, the return is round 70%.
And though Buffett has been promoting shares in latest quarters, he says that almost all of Berkshire Hathaway’s portfolio will stay invested within the US market.
US dominance
Think about the next workday — not completely out of the strange — for somebody within the UK.
They’re woken up by the alarm on their Apple iPhone, earlier than rising to make a cup of Costa-branded espresso (owned by Coca-Cola) and a bowl of cereal (in all probability a model from Kellanova, generally referred to as Kellogg’s).
Munching their flakes, they scroll by way of social media — Instagram, Fb (each owned by Meta), and X. Then they go to work (maybe in a Ford, Tesla, or Uber rideshare).
Within the workplace, they test their emails (Google or Microsoft), and possibly use software program and platforms from Workday, Salesforce, and Microsoft. Maybe a few Zoom conferences will happen.
After work, they go dwelling and order some meals (through Uber Eats). Then they unwind with Netflix and YouTube — owned by Alphabet (NASDAQ: GOOG) — earlier than doing a little bit of purchasing on Amazon.
Earlier than delivering, they e-book a calming weekend away (by way of Reserving Holdings or Airbnb).
In the meantime, each single card/on-line fee they’ve made all day (and on daily basis) is processed by Visa or Mastercard.
An inexpensive tech inventory
4 years in the past, Buffett additionally mentioned: “In its temporary 232 years of existence…there was no incubator for unleashing human potential like America.”
Once I stay up for future potential mega-trends (area exploration, quantum computing, digital actuality, and many others), it’s US-listed corporations which can be in pole place to dominate.
Take Alphabet. Finest referred to as the mother or father of Google and YouTube, it additionally owns robotaxi agency Waymo. Final yr, the corporate offered over 4m driverless taxi rides, averaging 150,000 journeys per week. Waymo is shifting into Austin and Texas in 2025, in addition to Tokyo, then Miami in 2026.
Then there’s quantum computing, which Google has been engaged on for over a decade. That could possibly be an totally transformative expertise, driving the US inventory market even larger.
Admittedly, Alphabet does face regulatory scrutiny and aggressive threats to its search empire. However at present buying and selling at simply 21 occasions ahead earnings, I believe this US inventory is price contemplating.
Diversification
Past Alphabet, there’s a threat that many US shares are at present overvalued (which in all probability explains why Buffett has been promoting). So I believe some allocation to different shares — cheaper UK ones, for instance — is a clever transfer.
Long run although, I nonetheless need publicity to the US market on account of its report of innovation and development. A lot of its high corporations even have huge worldwide operations.
