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Opinion: How to put Warren Buffett in charge of your retirement investing

InvestorPlace ·  Aug 18, 2021 10:56  · Opinions

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I realize the headline of this story probably seems like clickbait, but by buying $Berkshire Hathaway Inc.-Class B(BRK.B.US)$ stock, you can turn over your nest egg directly to Warren Buffett.

Sometimes I'm convinced people want to make investing more difficult than it needs to be. Why buy $GameStop Corp(GME.US)$ and hope for a turnaround miracle when you can buy $Apple Inc(AAPL.US)$ and enjoy the ride?

Countless investors struggle to fully understand how Warren Buffett thinks and identify their own “Buffett stocks” to buy. You don't have to be envious of Buffett's stock picking skills. You don't have to be the next Warren Buffett. Keep things simple. Just buy BRK.B stock and Buffett works for you.

Invest Like Warren Buffett

Any time friends or family ask me for stock picks, I always send them a link to Berkshire's top stock holdings. I'm admittedly no Warren Buffett when it comes to picking stocks. But the actual, real-life Warren Buffett is out there picking stocks all the time. Berkshire Hathaway is Buffett's holding company that invests in dozens of public and private companies.

Reading about Buffett's investment philosophy and sorting through Berkshire's quarterly 13F filings is great. You can learn a lot about Buffett's investing philosophy by doing so. But if you're looking to invest like Buffett in 2021, the easiest thing to do is buy the stocks he actually owns. Not only that, but buy the stocks he owns at the prices he buys them. And buy them weeks or months before the public knows he buys them.

There is only one way to do all those things – by buying BRK.B stock.

Remember that annoying kid back in high school that got 100 on every test? What if you could have simply told your teacher that rather than taking the test yourself, you'll just agree with whatever answers the smartest kid in the class has? That is essentially what investors can do today by buying Berkshire Hathaway stock.

The Buffett ETF

One of the basic fundamental principles of retirement investing is to diversify your stock portfolio. But the beauty of Berkshire Hathaway stock is that it is diversified in itself.

I always tell people that Berkshire Hathaway stock is essentially a Warren Buffett exchange-traded fund. Today, Berkshire holds stakes in nearly 50 different public stocks. Top holdings include Apple, $Bank of America Corporation(BAC.US)$ and $American Express Co(AXP.US)$. In addition, Berkshire wholly owns dozens of private companies that investors would otherwise never be able to buy. Berkshire's wholly owned subsidiaries include GEICO, Duracell, Dairy Queen and Fruit of the Loom.

Buffett has an exceptional history of private deals. In 1985, Buffett financed a deal to buy Capital Cities/ABC for around $500 million. Less than 10 years later, he sold the company to $Walt Disney Company(DIS.US)$ for $19 billion.

Buffett’s track record speaks for itself. He is still one of the world’s 10 wealthiest people even after donating billions of dollars to philanthropic causes. But even though Buffett is now 90 years old, Berkshire is still outperforming. In the past 10 years, BRK.B stock is up 304.3% compared to a 279.9% gain for the S&P 500.

BRK.B Stock As a Long-Term Investment

What I hear most often when I recommend Berkshire Hathaway stock is that Warren Buffett is 90. I'm 37 years old. I'm likely not retiring for at least another 30 years. Warren Buffett seemed to be in fine health as of Berkshire's latest annual meeting. But I’m not expecting someone whose diet consists largely of $McDonald's Corp(MCD.US)$ and $Coca-Cola Company(KO.US)$ to live to be 120 years old.

The great thing about Buffett's long-term investing philosophy is that everything Berkshire owns today has the Buffett vote of confidence for many years ahead. Buffett once famously said he wouldn’t make any investment he wasn't confident in owning for at least 10 years. In addition, Buffett has hand-selected his successor, Greg Abel. Abel, who is 59, has been with Berkshire for more than 20 years. Buffett could have selected anyone he wanted to succeed him, and he has 20 years of experience working with Abel. If you trust Buffett's stock picking ability, you should trust his choice of Abel to take over when he's gone.

Buy What Warren Buffett Is Buying

But perhaps the best endorsement of why you should buy Berkshire Hathaway stock is that Buffett has been buying it. Berkshire has about $144 billion in cash. In the past, Buffett would likely have been looking to make some major buyout deals with that cash. Instead, Berkshire bought back $30.6 billion of its own stock in the past four quarters.

Do you want to buy what Warren Buffett is buying in your retirement portfolio? It’s simple. Buy Berkshire Hathaway stock.

On the date of publication, Wayne Duggan held long positions in BRK.B and BAC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Wayne Duggan has been a U.S. News & World Report Investing contributor since 2016 and is a staff writer at Benzinga, where he has written more than 7,000 articles. Mr. Duggan is the author of the book <span><span>“Beating Wall Street With Common Sense,”</span></span> which focuses on investing psychology and practical strategies to outperform the stock market.

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