Got $1,000 and want to make it grow over the long term? You could put it all into Apple (NASDAQ:AAPL | AAPL Price Prediction) stock or Bank of America (NYSE:BAC) stock and you’d probably do well. However, you’d also have to accept single-stock risk.
What if you could put that $1,000 into a stock that is almost the same as owning a fully diversified exchange traded fund (ETF)? Moreover, what if this stock has a track record of vastly outperforming the S&P 500?
With Berkshire Hathaway (NYSE:BRK-B) stock, you can park a small, medium, or large amount of capital and confidently let it sit in your account for years. Granted, there’s a leadership change happening soon at Berkshire Hathaway, but this shouldn’t dissuade you from owning a piece of a legendary wealth-building conglomerate.
Broad Diversification in Just One Stock
Berkshire Hathaway CEO Warren Buffett is famous for researching and picking great stocks so you don’t have to put in the time and effort. Much like an ETF that holds a broad array of stocks from various market sectors, Berkshire Hathaway stock provides exposure to dozens of different businesses.
Even outside of its portfolio of stock holdings, Berkshire Hathaway is itself a diversified conglomerate. In fact, Berkshire’s brands include famous names such as Fruit of the Loom, Geico insurance, Dairy Queen, and Ginsu knives.
Furthermore, Berkshire Hathaway owns shares of a broad mix of stocks. For technology sector exposure, there’s Apple stock and and Amazon (NASDAQ:AMZN) stock. Next, add in some financial stocks like Bank of America, American Express (NYSE:AXP), and Citigroup (NYSE:C).
The food and beverage sector is also represented with shares of Kraft Heinz (NASDAQ:KHC) and Coca-Cola (NYSE:KO). On top of all that, Berkshire Hathaway has the energy sector covered with exposure to Chevron (NYSE:CVX) stock and Occidential Petroleum (NYSE:OXY) stock.
Imagine trying to invest in all of these companies, plus dozens more in different sectors, all by yourself with only $1,000. This would be impractical and maybe even impossible. Yet, it’s actually easy to do as you can simply buy and hold Berkshire Hathaway stock.
Beat the Market with Great Value Picks
Plus, you can potentially beat the market over many years with BRK stock. Buffett perfected Berkshire Hathaway’s stock picking strategy by focusing on great businesses that trade at a fair value.
Choosing great value stocks involves more than just looking at price-to-earnings (P/E) ratios, of course. Still, it’s surely not just a coincidence that you’ll find businesses with low valuation multiples within Berkshire Hathaway’s portfolio holdings.
Just a few examples are Bank of America (with a trailing 12-month P/E ratio of 12.96x), Occidental Petroleum (17.8x), and Kraft Heinz (12.75x). Clearly, Buffett leans toward stocks that aren’t overpriced in relation to the companies’ earnings.
At the same time, Buffett and Berkshire don’t shy away from growth stocks. Who could possibly argue with the long-term historical performance of Amazon stock and Apple stock?
Speaking of historical performance, Buffett’s approach has benefited his legions of followers with terrific wealth-building opportunities. All they had to do was buy and hold BRK stock for a long time.
I’ll put it to you this way. From 1965 to 2024, with the dividends factored in, the S&P 500 has returned 39,054% and provided compound annual gains of 10.4%. During that same time frame, Berkshire Hathaway stock returned a jaw-dropping 5,502,284% with compound annual gains of 19.9%.
As the old saying goes, past performance doesn’t guarantee future returns. Nonetheless, Berkshire Hathaway stock has an amazing, market-beating track record and should impart confidence to investors off all stripes.
The End, or a New Beginning?
Some skeptics might consider Berkshire Hathaway stock a “cult stock” because it is so closely associated with Buffett. There’s no denying that Buffett, also known as the Oracle of Omaha, is largely responsible for the success of Berkshire.
At Berkshire Hathaway’s recent annual shareholder meeting, Buffett announced that he will retire as the company’s CEO at the end of 2025. It’s the end of an unforgettable era that spanned 55 years.
Berkshire Hathaway Vice Chair Greg Abel will take over the company’s CEO position on January 1, 2026. In anticipation of this change, some investors immediately dumped their BRK shares and the stock dropped 5%.
I strongly suspect that those panicky, overly reactive traders will regret their decision to sell their Berkshire Hathaway shares. Just as Apple continued to thrive after Tim Cook replaced CEO and co-founder Steve Jobs, Berkshire should remain a profitable powerhouse after Abel succeeds Buffett.
Abel isn’t likely to radically alter Buffett’s value-centered investment approach. It’s unlikely that Berkshire Hathaway will inexplicably divest its Occidental Petrolum and Bank of America shares after Buffett retires.
Consider, then, that Berkshire Hathaway is about to start the next chapter of its lengthy and celebrated history. So, feel free to ignore the panic sellers and park your $1,000 in BRK, the market-beating stock that functions like a fully diversified ETF.
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