The Smartest Trillion-Dollar Stock to Buy With $1,000 and Hold Forever

A select few companies have reached a market cap of $1 trillion, marking them as leaders in their respective fields. Generally, these companies provide returns that outperform the market. While each of these giants could be a worthwhile investment, one stands out as particularly compelling: the conglomerate Berkshire Hathaway. The company's class B shares are priced at just under $529 per share, making it an excellent stock to buy with $1,000 and hold for the long term. Let’s explore why.

Close to an Index Fund

Let’s begin with a story. In 2007, Warren Buffett famously bet $1 million that an S&P 500 index fund would outperform a portfolio of hedge funds, even when accounting for the funds' fees. Hedge fund manager Ted Seides took the bet and ended up losing.

The takeaway from this story is that it is hard to beat well-established indexes like the S&P 500 due to their diversification. The S&P includes large companies from various industries, where some may have a market cap exceeding $1 trillion, while others might be valued at less than $10 billion. Due to this diversification, different companies react differently during economic downturns. Even when some companies struggle, others may perform well. For investors looking to own a single stock, it’s often wiser to invest in an exchange-traded fund (ETF) that tracks a major index or, better yet, to consider investing in Berkshire Hathaway.

Berkshire Hathaway owns a vast array of subsidiaries across different sectors, and its portfolio of stocks adds another layer of diversification. While Berkshire may not completely rival the S&P 500 in terms of diversification, it is one of the closest options available, especially among trillion-dollar companies, offering a distinct advantage to its investors.

A Strong Leader is Key

While some hedge funds can outperform the market, only a few are managed by highly respected leaders on Wall Street, many of whom have amassed great wealth. This shows that a company's leadership is one of the best indicators of its future success, and in the case of Berkshire Hathaway, there’s perhaps no leader better than Warren Buffett. Nicknamed the Oracle of Omaha, Buffett has consistently helped Berkshire outperform the market for decades, achieving long-term returns that far exceed those of the S&P 500.

However, it should be noted that Buffett is now in his 90s, raising questions about Berkshire’s future after his eventual departure. Fortunately, it appears that the company is poised to continue its winning strategies. Buffett has worked diligently to prepare for a post-Buffett era at Berkshire. One confirmed successor is Greg Abel, who currently serves as the vice-chairman of the non-insurance operations.

Furthermore, Buffett has instilled a corporate culture steeped in his successful investment philosophy. Many of those rising within Berkshire have gained valuable insights under his leadership. This means that even after Buffett is gone, the essence of his methodology will likely carry on, reinforcing confidence that Berkshire Hathaway will maintain its focus on profitability and intelligent investment practices.

In conclusion, Berkshire Hathaway represents a well-established, diversified, and highly profitable company with capable leadership and invaluable intangible assets, positioning it strongly for the future. Therefore, if you're looking for a single investment among companies with a market cap exceeding $1 trillion, Berkshire Hathaway stands out as perhaps the best choice.

investment, Berkshire, leadership