Warren Buffett, Who Railed Against Diversification, Has These 10 Stocks That Make Up 87% Of His Portfolio

Written by Paul Sacca on October 27, 2021 updated October 22, 2024

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Conventional financial advice states that people should diversify their investments to protect against risk. However, Warren Buffett famously proclaimed, “Diversification is protection against ignorance. It makes little sense if you know what you’re doing.” The Oracle of Omaha believes that fully understanding an industry or sector and investing in a proven commodity protects you from the risk of companies that you are not familiar with.

At the 1994 Berkshire Hathaway annual meeting of investors, Buffett said, “We’re not going to do that unless we think we understand the business very well, and we think the nature of the business, what we’re paying for it, the people running it, and all of that lead up to virtually no risk.”

“We only advise you to do that — well, we probably don’t advise you to do it all, maybe — but we would only advise you to do it, if you’re doing it based on your conclusions about — your own ideas of value, and something that you really feel you know enough to buy the whole business, if your funds were sufficient, and it was being offered to you. You ought to really understand the business,” Buffett continued.

Buffett’s mentor – Benjamin Graham – wrote about carefully selecting investments in his 1949 book The Intelligent Investor, “The determining trait of the enterprising investor is his willingness to devote time and care to the selection of securities that are both sound and more attractive than the average. Over many decades, an enterprising investor of this sort could expect a worthwhile reward for his extra skill and effort in the form of a better average return than that realized by the passive investor.”

Buffett described The Intelligent Investor as “by far the best book about investing ever written.”

Buffett puts nearly all of his eggs in a handful of baskets – and those baskets perform extremely well for the legendary investor. There are 10 companies that made up $286.1 billion – or 87% – of Buffett’s portfolio of stocks, according to The Motley Fool.

Apple: $134.9 billion
Bank of America: $49.1 billion
American Express: $28.4 billion
Coca-Cola: $21.8 billion
American Express: $28.4 billion
Moody’s: $9.4 billion
U.S. Bancorp: $9.2 billion
BYD Corp.: $8.6 billion
Verizon Communications: $8.4 billion
Bank of New York Mellon: $4.4 billion

“Buffett’s Berkshire now owns just over 5% of Apple, which has a total market value of exceeding $2 trillion, making it Buffett’s largest investment by far in another publicly traded company,” CBS News reported in March. “At $120 billion, Berkshire’s stake in Apple equals about just over 42% of its overall investment portfolio. All of the Apple shares are owned by Berkshire, and not Buffett directly.”