This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Warren Buffett, the longtime CEO of Berkshire Hathaway, oversees a portfolio of investments worth nearly $292 billion. His success in the market over decades continues to captivate the attention of investors hoping to find winning stocks based on his picks.
While replicating Warren Buffett's success isn't possible, there are a handful of his investments that are no-brainer buys no matter what type of investments you're looking for. Here are two of them.
1. Amazon
Berkshire Hathaway added Amazon (NASDAQ: AMZN) to its portfolio in 2019 and currently owns 10 million of the company's shares. Two compelling reasons to buy Amazon right now are the company's dominance in the retail space and its lead in cloud computing.
Amazon holds 40% of U.S. e-commerce market share, far outpacing rival Walmart with just 7.4%, according to eMarketer.
Amazon's massive marketplace generated $95.5 billion in North American revenue in the third quarter (which ended Sept. 30), an increase of 11%. Even more impressive is that the company's total operating income spiked 55% to $15.3 billion.
Additionally, Amazon continues to benefit from its impressive cloud computing business. Amazon Web Services (AWS) sales rose 19% to $27.5 billion in the third quarter and there's likely more growth ahead. AWS is the leading cloud computing company with 31% of the market and Goldman Sachs estimates cloud computing will become a $2 trillion market by 2030, fueled by artificial intelligence (AI) growth.
While Amazon's stock isn't cheap, with a price-to-earnings (P/E) ratio of 45, the company's dominance in the U.S. e-commerce and cloud computing markets continues to make it a compelling investment opportunity.
2. Vanguard S&P 500 ETF
I know putting an exchange-traded fund (ETF) on this list might not be exactly what some readers were expecting. Still, the Vanguard S&P 500 ETF (NYSEMKT: VOO) deserves to be here for several reasons, most importantly because Warren Buffett recommends that most investors own an index fund.
S&P 500 index funds track the growth of the largest 500 publicly traded companies on U.S. stock exchanges. This means that the index fund benefits when the broader market is doing well, no matter what sector is growing. It's one of the easiest ways to invest.
"In my view, for most people, the best thing to do is to own the S&P 500 index fund," Buffett said at the Berkshire Hathaway 2020 annual meeting.
Berkshire Hathaway's large portfolio even includes 43,000 shares of the Vanguard S&P 500 ETF. So, why is one of the world's most successful investors so bullish on S&P 500 index funds? Because they're hard to beat.
Data from Morningstar shows that over the past decade, just 29% of actively managed funds beat their passive-indexed peers. They're also cheap. The Vanguard S&P 500 ETF has a very low expense ratio of just 0.03%.
That means for every $10,000 invested, you'll pay just $3 in expense ratio fees. I can attest to the benefits of the Vanguard S&P 500 ETF, as it's been the largest percentage of my portfolio for years.
For investors looking to follow in Warren Buffett's footsteps, it might be better to follow his advice for most people: Buy an index fund now and hold it for years.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
