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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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
