Personal finance experts emphasize the importance of diversifying your portfolio. Investing too much money in a single stock can lead to significant fluctuations in your wealth. Any unexpected changes in the company, industry, or government regulations could result in a substantial loss in the value of your portfolio.
Warren Buffett believes that diversification is not always necessary when constructing a portfolio. He has stated that “Diversification is a protection against ignorance.” According to Buffett, if you have the ability to analyze a business, its industry, and its stock, there is no need to own more than a few exceptional companies.
Buffett practices what he preaches, with a significant 67.3% of Berkshire Hathaway’s $361 billion portfolio invested in just four stocks.
1. Apple (40.1%)
Apple is the largest holding in Berkshire Hathaway’s equity portfolio. Despite some trimming of the position in recent quarters, Berkshire still holds nearly 800 million shares of Apple. Buffett has praised Apple’s CEO Tim Cook and considers it a better business than any other owned by Berkshire.
2. Bank of America (10.6%)
Buffett acquired the bulk of Berkshire’s stake in Bank of America in 2011. Despite recent struggles due to high interest rates, Buffett sees potential in the bank and has continued to add shares to his position.
3. American Express (9.7%)
Buffett began buying shares of American Express in the early 1990s and plans to maintain Berkshire’s position indefinitely. American Express has a unique business model that sets it apart from other credit card issuers.
4. Coca-Cola (6.9%)
Coca-Cola is one of Berkshire Hathaway’s longest-held equity positions. Buffett views Coca-Cola as a classic investment due to its strong brand and cost advantages. The company’s global presence and operational efficiency make it an attractive investment.
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Bank of America and American Express are advertising partners of The Ascent, a Motley Fool company. Adam Levy has positions in Apple. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy.
