Warren Buffett is investing in this red hot sector right now and so am I

This is where legendary investor Warren Buffett is investing billions of dollars at the moment.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

In the past, Warren Buffett tended to avoid the technology sector when picking stocks for his investment company Berkshire Hathaway. This was due to the fact that he didn’t understand it very well, and one of his main investing rules is that he only invests in things he understands. Take a look at his portfolio and you’ll generally find companies that have very simple business models, such as Coca Cola, Kraft, and American Express. However, in recent years, Buffett’s view on technology appears to have changed dramatically. The Oracle of Omaha is now buying tech stocks for his portfolio.

Buffett is buying tech stocks

For example, as I noted in an article late last year, Buffett has built up a substantial holding in iPhone maker Apple in recent years. Currently, Apple is his largest holding and his position is worth over $50bn. Buffett has stated that he likes Apple because of “the value of their ecosystem and how permanent that ecosystem could be” and has also remarked that he would own 100% of Apple stock if he could.

More recently, it’s come to light that Berkshire has also taken a stake in Amazon. Apparently, this was not Buffett’s personal decision and the call was made by one of the Berkshire Hathaway portfolio managers. However, Buffett has said he would not “second guess” their decision. Additionally, Berkshire took a sizeable position in Red Hat – a major player in cloud services development – earlier this year.

It’s also worth noting that Buffett’s billionaire business partner Charlie Munger recently told investors that he and Buffett were “ashamed” that they hadn’t invested in Google, which has grown to become one of the world’s most valuable companies. “We just sat there sucking our thumbs,” Munger said. “We screwed up.”

Clearly, Buffett and his team see long-term investment appeal in the technology sector now.

How UK investors can follow Buffett

When it comes to large-cap technology stocks, UK investors don’t have a lot of choice, as the FTSE 100 is rather light on technology. However, that shouldn’t stop you investing in the technology sector if you want to emulate Buffett. It certainly hasn’t stopped me.

One easy way to get some US tech exposure is through global equity funds as these often have a healthy weighting to the technology sector. For example, the Fundsmith Equity fund, which I have owned for a while, has a substantial position in Microsoft Corp. 

I’ve also begun accumulating positions in the Polar Capital Global Technology fund, which counts the likes of Microsoft, Google, and Amazon among its top six holdings, as well as the Scottish Mortgage Investment Trust, which is also tech-focused.

Finally, I’ve bought shares in both Apple and Google in recent months, as I believe that both companies look extremely attractive from a long-term (20-year plus) view.

The takeaway here is that if you’re looking to follow Buffett and invest in technology, don’t let the fact that you’re based in the UK hold you back. These days, it’s easier than ever to get exposure to world-class technology stocks that are listed internationally.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in Apple, Google and Scottish Mortgage Investment Trust and has position in the Fundsmith Equity fund and the Polar Capital Global Technology fund. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (C shares), Amazon, Apple, and Microsoft. The Motley Fool UK has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

2 industry-leading value stocks investors should consider buying

These value stocks are at the top of their respective industries, and look like current bargains with the potential to…

Read more »

Black father and two young daughters dancing at home
Investing Articles

Just released: our 3 top small-cap stocks to buy before August [PREMIUM PICKS]

Small-cap shares tend to be more volatile than larger companies, so we suggest investors should look to build up a…

Read more »

Investing Articles

If I’d put £5k in a FTSE 100 index fund 10 years ago, here’s what I’d have now!

Charlie Carman explores the performance of the FTSE 100 index over the past decade and the merits of passive versus…

Read more »

Investing Articles

£15K stashed away? I could turn that into a second income worth £49 a day!

This Fool explains how she would look to gain a second income through investing in UK stocks, and the steps…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

With the Apple share price near an all-time high, would I be crazy to buy more?

After touching all-time highs yesterday, the Apple share price is on a roll. But is there still enough growth ahead…

Read more »

Investing Articles

Nvidia stock has fallen 13% from its 52-week high! What next?

Our writer explains why Nvidia stock has dipped recently and highlights some risks associated with investing in the AI leader…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

The AstraZeneca share price is up 88% in 5 years, but is it just getting started?

The AstraZeneca share price has had a great few years, as acquisitions and clinical trials delighted shareholders. So is there…

Read more »

Investing Articles

Here’s why I’m watching the Anglo American share price

The mining sector has always interested investors. But after a flat few years, I'm wondering what's next for the Anglo…

Read more »