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

A very small number of companies have reached a market capitalization of $1 trillion. Each of these companies leads its industry and tends to provide returns that outperform the market. Among these giants, one stands out as particularly appealing: the conglomerate Berkshire Hathaway led by Warren Buffett. At present, shares of its class B stock are priced just under $529, making it an excellent choice for anyone looking to invest $1,000 and hold it for the long term. Here’s why.

The Closest Thing to an Index Fund

Let’s consider a story. Back in 2007, Buffett made a bet of $1 million that an S&P 500 index fund would outperform a group of hedge funds over a ten-year period, even when accounting for the associated costs of the hedge funds. Ted Seides, a hedge fund manager, accepted the wager and ultimately lost.

The takeaway is clear: it’s tough to beat major indexes like the S&P 500 because they are broadly diversified. The S&P 500 consists of companies from various industries and sectors, including some valued over $1 trillion and others worth less than $10 billion. Different companies react differently to economic downturns; while a few might struggle, others tend to do well. For most investors interested in purchasing just one stock, it’s wise to consider investing in a selection of them through an exchange-traded fund (ETF) that follows either the S&P 500 or another major index, or simply buy shares of Berkshire Hathaway itself.

Berkshire Hathaway owns many subsidiaries across a wide range of industries. Moreover, it has a portfolio filled with various investments, which adds further diversification. While Berkshire Hathaway may not match the S&P 500 in diversification, it is hard to find another single corporation that comes as close, particularly among the trillion-dollar companies. This offers Berkshire Hathaway a definite edge.

An Effective Indicator of Success

Some hedge funds do occasionally outperform the market, and the managers who manage to achieve this are often highly esteemed on Wall Street, with some even becoming billionaires. This demonstrates that a company’s leadership is one of the strongest indicators of its success, even among hedge funds.

When it comes to beating the market, few can rival Warren Buffett. The Oracle of Omaha has consistently done so for many years. The long-term performance of Berkshire Hathaway is better than what the S&P 500 has managed to achieve.

Not many companies can claim to have consistently outperformed the market over decades. The list becomes even shorter when focusing on those with a single leader at the helm for a prolonged period. However, Buffett is in his 90s now, and he won’t be around forever, which raises a question: what will happen to Berkshire Hathaway when he is no longer in charge?

Fortunately, everything points to Berkshire Hathaway continuing to adhere to the principles and vision that have contributed to its success. A great leader not only achieves personal success but also prepares the next generation to take over. Even without detailed insider knowledge of Berkshire Hathaway’s operations or the identity of Buffett’s successor, we can reasonably believe he has been actively nurturing leadership within the company. In fact, it has been confirmed that Greg Abel, the vice-chairman of non-insurance operations, is Buffett's chosen successor.

Furthermore, Buffett has instilled a culture within the company that revolves around his investment philosophies and other key values. Those who have advanced through the ranks of Berkshire Hathaway are likely to have absorbed the Oracle of Omaha’s teachings. Therefore, after Buffett's departure, the company’s strength won’t merely depend on one individual, whether that is Abel or someone else.

In summary, Berkshire Hathaway is a well-established, diversified, and highly profitable company, equipped with strong leadership and invaluable principles that should enhance its performance for years to come. For anyone looking to invest $1,000 in a company with a market cap exceeding $1 trillion, Berkshire Hathaway stands out as a prime option.

investment, stocks, leadership