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

Happy young plus size woman sitting at kitchen table and watching tv series on tablet computer
Investing Articles

Could Raspberry Pi shares hit £5 by 2030?

After a strong start out of the blocks this month, our writer asks whether Raspberry Pi shares could move further…

Read more »

Close-up of British bank notes
Investing Articles

Five 5%+ yielders I’d buy for an ISA today!

Our writer identifies a handful of FTSE 100 and FTSE 250 firms each yielding at least 5% he'd happily buy…

Read more »

Front view photo of a woman using digital tablet in London
Investing Articles

5 stocks with 5%+ yields I’d love to buy and hold in a Stocks and Shares ISA

Harvey Jones is keen to add these five FTSE 100 high-yielders to his Stocks and Shares ISA, ideally before they…

Read more »

A young Asian woman holding up her index finger
Investing Articles

I’d target £880 of passive income annually, spending £10K now on this FTSE 100 share

Our writer explains how he would add to his diversified portfolio happily by investing in this FTSE 100 passive income…

Read more »

Light trails from traffic moving down The Mound in central Edinburgh, Scotland during December
Investing Articles

3 reasons I think the Scottish Mortgage share price could keep rising

Christopher Ruane explains a trio of reasons he thinks the once-mighty Scottish Mortgage share price could be set to increase…

Read more »

Syringe and vial on blue background
Investing Articles

Is this forgotten FTSE share about to make investors rich all over again?

Not long ago, this FTSE share was all the rage before demand dropped off and things went south. Is it…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

I’d use these 5 Warren Buffett approaches to build wealth

Christopher Ruane outlines a handful of investing lessons from billionaire Warren Buffett that he thinks can help a small investor…

Read more »

US Stock

Nvidia stock: 3 things investors need to know as it surges towards $150

Nvidia is a stock that's had an extraordinary run in 2024. Edward Sheldon highlights some important things investors should know.

Read more »