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Billionaire investor Warren Buffett has delivered many phrases of investing knowledge over the previous few many years. Typically, his strongest have been the best.
As an illustration, in his 2021 letter to Berkshire Hathaway shareholders, Buffett wrote these 4 key phrases: “By no means guess towards America.”
For the reason that aptly-named Oracle of Omaha stated that, a man-made intelligence (AI) revolution has unleashed a tidal wave of innovation and funding. Nvidia alone has added almost $3trn to its market capitalisation — greater than your entire London Inventory Alternate!
Any investor who had heeded Buffett’s phrases 4 years in the past and purchased into an S&P 500 tracker can be up over 60% with dividends. For the tech-driven Nasdaq 100 index, the return is round 70%.
And regardless that Buffett has been promoting shares in current 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 atypical — 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 means 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 verify their emails (Google or Microsoft), and doubtless use software program and platforms from Workday, Salesforce, and Microsoft. Maybe a few Zoom conferences will happen.
After work, they go house and order some meals (by way of 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 means of Reserving Holdings or Airbnb).
In the meantime, each single card/on-line fee they’ve made all day (and each day) is processed by Visa or Mastercard.
An affordable tech inventory
4 years in the past, Buffett additionally stated: “In its temporary 232 years of existence…there was no incubator for unleashing human potential like America.”
Once I sit up for future potential mega-trends (area exploration, quantum computing, digital actuality, and so forth), it’s US-listed corporations which are in pole place to dominate.
Take Alphabet. Greatest referred to as the dad or mum of Google and YouTube, it additionally owns robotaxi agency Waymo. Final yr, the corporate supplied over 4m driverless taxi rides, averaging 150,000 journeys per week. Waymo is transferring 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 might be an totally transformative expertise, driving the US inventory market even increased.
Admittedly, Alphabet does face regulatory scrutiny and aggressive threats to its search empire. However presently buying and selling at simply 21 occasions ahead earnings, I feel this US inventory is value contemplating.
Diversification
Past Alphabet, there’s a threat that many US shares are presently overvalued (which in all probability explains why Buffett has been promoting). So I feel some allocation to different shares — cheaper UK ones, for instance — is a sensible transfer.
Long term although, I nonetheless need publicity to the US market because of its report of innovation and progress. A lot of its high corporations even have large worldwide operations.
