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I heeded Warren Buffett by buying 4 US growth stocks!

Warren Buffett at a Berkshire Hathaway AGM
Warren Buffett at a Berkshire Hathaway AGM

In the world of investing, my all-time hero is US mega-billionaire Warren Buffett. Recognised as one of the greatest-ever investors, Buffett has a personal fortune of $108.4bn. What’s more, he’s an incredible philanthropist, having donated $49bn to good causes.

Buffett lives to invest

Known as the ‘Oracle of Omaha’, 92-year-old Buffett has been investing since he was 11. Despite his age, he remains chairman and CEO of vast conglomerate Berkshire Hathaway (in which my wife owns shares).

Known for his wise words and pithy quotes, Buffett’s wisdom has guided millions of investors, including me. One powerful yet simple quote recently drove me and my wife to bet big on four US tech stocks. In his 2021 letter to Berkshire shareholders, Buffett said: “Never bet against America.”

Like him, we’re buying America

He added: “In its brief 232 years of existence…there has been no incubator for unleashing human potential like America. Despite some severe interruptions, our country’s economic progress has been breathtaking.”

Last Friday, I had two thoughts. First, what if the Republican ‘red wave’ in US mid-term elections didn’t emerge? Second, what if this week’s US inflation figure surprised to the positive? In this scenario, US tech stocks might well stage a significant relief rally.

This has been a tough year for US tech stocks, many of which have more than halved in value. Hence, taking Buffett’s advice to heart, my wife bought four high-tech shares for our new US-focused growth portfolio.

We bought these tech mega-cap stocks

Last Friday, my wife bought six new stocks for this new portfolio. Our buys included shares in these four tech Goliaths, each a colossus in its field:

Company

Sector

Market value

Stock price

One-week change

One-year change

Apple

Consumer electronics

$2.38trn

$149.70

9.1%

-0.2%

Microsoft

Microsoft

$1.84trn

$247.11

11.3%

-26.6%

Alphabet

Search

$1.25trn

$96.41

10.3%

-35.2%

Amazon

E-commerce/Cloud

$1.03trn

$100.79

9.5%

-42.8%

Each of these well-known companies is huge. Even the smallest, Amazon, is worth over a trillion dollars, while Apple‘s value nears $2.4trn. In other words, they’re giants. And in American capitalism, the giants usually win — until anti-trust legislation breaks them up, history suggests.

Socks and stocks

If you’d asked me to buy any of these stocks a year ago, my answer would have been a resounding no. Twelve months ago, the tech bubble was grossly inflated, leading me to warn repeatedly of a stock-market crash in 2022. And so it came to pass, with the Nasdaq Composite index crashing as much as 37.8% from its November 2021 peak. Crikey.

But after such steep falls among US tech stocks, another Warren Buffett saying came to my mind. It goes: “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” Thus, it made sense to me to buy into these tech powerhouses at (in three cases, steeply) discounted prices.

So far, we’ve been rewarded with strong early gains from these new stocks. But the risk of a global recession is growing by the day. Also, high inflation, soaring energy bills and rising interest rates are hammering household budgets around the world. In short, 2023 could be very tough for corporations — even these four behemoths. But we bought these shares for very long-term gains!

The post I heeded Warren Buffett by buying 4 US growth stocks! appeared first on The Motley Fool UK.

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Cliffdarcy has an economic interest in all shares mentioned in this article. 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. The Motley Fool UK has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Microsoft. 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.

Motley Fool UK 2022