There isn’t one unique path to becoming a billionaire. Today’s top investors have built their fortunes by investing in a variety of companies — some focusing on high-growth technology players and other favoring dividend-paying stalwarts of the American economy.
That’s just to mention two strategies, but there are many more. Even the number of holdings often varies greatly. For example, Warren Buffett’s Berkshire Hathaway holds about 40 positions, while Ken Griffin’s Citadel invests in thousands of stocks.
But sometimes, these market-savvy billionaires agree on certain investments, and in the case of Buffett and Griffin, one particular holding stands out. These two famous investors are known for their stockpicking skills, yet this asset, which appears in both of their portfolios, doesn’t require those talents.
At the same time, this investment is known to increase over time, so it’s likely to grow the billionaires’ wealth without them lifting a finger. Is it right for you, too?
Image source: Getty Images.
Tracking the S&P 500
The investment I’m talking about is the SPDR S&P 500 ETF Trust(NYSEMKT: SPY), an exchange-traded fund that tracks the performance of the S&P 500. ETFs are funds that focus on a particular theme, such as pharmaceutical or tech stocks, or aim to replicate the performance of an index. They trade daily, so you can buy them as you would a stock. One thing to be aware of is they do involve fees, so to minimize your costs, be sure to choose one with an expense ratio of less than 1%.
The SPDR S&P 500 ETF, with an expense ratio of 0.09%, easily makes it into our good value criteria — as I would expect from a Warren Buffett investment since this top investor is known for favoring value.
So why do Buffett and Griffin — both excellent at picking out the next winning stock — agree on holding shares of the SPDR S&P 500 ETF? A look at Griffin’s holdings shows he’s bullish on the top stocks powering the U.S. economy today, with significant positions in companies including Nvidia, Microsoft, and Meta Platforms, for example. And these companies are among the top holdings of the SPDR S&P 500 ETF, so by investing in the ETF, Griffin reinforces his bet on today’s leaders. He even increased his position in the SPDR S&P 500 ETF in the most recent quarter by more than 120%.
Buffett is known for his belief in the American economy. In his 2013 shareholder letter, he said that a good S&P 500 fund is likely to achieve better returns than those generated by most investors. Unlike Griffin, Buffett isn’t heavily invested in tech stocks, the players that have in recent times led market gains. In fact, his only significant tech investment is in Apple, his biggest position by value. But Buffett is benefiting through his position in the SPDR S&P 500 ETF.
Should you follow the billionaires?
So, should you follow Griffin and Buffett into this top ETF? Regardless of your investment strategy, the answer is yes, and here’s why.
The SPDR S&P 500 ETF offers you exposure to all of today’s leading companies, giving you the opportunity to benefit from their victories. At the same time, thanks to the sheer number of stocks in the fund, your risk of losses is limited.
On top of this, the S&P 500’s track record shows us that, over time even after bear markets, the index has gone on to recover and advance. And it’s likely this pattern will continue.
This means an investment in an ETF that tracks this performance is likely to score a long-term win for you, too. It’s also important to remember that the S&P 500 — and ETFs that track it — are flexible, adding and subtracting members to reflect the current economy’s powerhouses. By investing in the SPDR S&P 500 ETF, you’ll always have exposure to the key companies of the times.
This doesn’t mean you should stop picking stocks, though. Like Ken Griffin and Warren Buffett, you can blend these two strategies, selecting some of your favorite companies for your portfolio and adding some shares of the SPDR S&P 500 ETF to complete the picture. Then, like these top investors, you may potentially grow significant wealth over time.
Should you invest $1,000 in SPDR S&P 500 ETF Trust right now?
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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
