Warren Buffett’s safest stock might not be Apple or Coca-Cola. 1 other stock that might be a better long-term buy.

In the mid-2000s, a former medical student turned portfolio manager named Michael Burry predicted the housing bust and its economic implications during the Great Recession. In more recent history, billionaires like Chamath Palihapitiya have emerged as prominent talking heads for markets, politics and everything in between.

But the investment industry is “what have you done for me lately?” mindset makes me skeptical that Burry or Palihapitiya will remain relevant over the coming decades. It’s a hard thing to do.

I can think of one investor for whom this question doesn’t really apply. Over several decades, Warren Buffett has become one of the best-known investors on the planet thanks to an unwavering commitment to simplicity and an aversion to drama and huge risks.

Let’s take a look at Buffett’s philosophy and evaluate his portfolio. While the Oracle of Omaha has had plenty of multibagger over the years, I see the stock as a special long-term opportunity.

Breaking down Buffett’s investment philosophy

Buffett’s investing style is rooted in a lot of simple and straightforward philosophies.

For starters, Buffett is a contrarian. To be fair, so is Michael Burry. But unlike Burry, Buffett is not one to take short positions or bet against America in times of recession.

Rather, Buffett looks for value opportunities that may be underappreciated or misunderstood. In other words, a particular share price or valuation multiple may not always tell the whole story about a business.

Time and again, Buffett has taken positions that look like head-scratchers on the surface. But after careful consideration, investors have come to see that he has a knack for spotting companies with strong, consistent cash flow and strong brand appeal.

Notable investments Buffett

Given the above explanation, it probably comes as no surprise to learn that Buffett loves blue chip stocks. While it has dabbled in some growth stocks in emerging areas such as artificial intelligence (AI), the overwhelming majority of its portfolio is concentrated in more mundane businesses in financial services, consumer goods, telecoms and energy.

Some of Buffett’s biggest winners over the years include Apple and Coca cola. Unlike many tech companies, Apple is unique because it perfectly fits Buffett’s criteria of seeking growth, but not at the expense of consistent profits.

Even though Buffett hasn’t even owned Apple stock in a decade, it’s his largest position right now — and that’s even after he unloaded a good portion of the position and reinvested the profits in Treasury bills.

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As for Coca-Cola, Buffett has owned the stock for decades. While this has resulted in significant price appreciation in his position, the real sweetener for Buffett is Coca-Cola’s generous and reliable dividend.

Which stocks does Warren Buffett think is the best long-term option?

My top Warren Buffett stocks are Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B)the holding company for all its functions.

Even though companies like Apple and Coca-Cola are fairly safe picks for investors, neither stock is immune to macro themes like economic slowdowns or changes in monetary policy. These can have ripple effects throughout the stock market, regardless of industry sector or specific companies.

Investing in Berkshire Hathaway inherently provides exposure to a number of high-quality companies in various industries. In addition to Apple and Coca-Cola, some of Berkshire’s largest holdings include American Express, Occidental Petroleum, Bank of America, Chevronand Visa.

Berkshire’s portfolio offers investors a level of diversification similar to S&P 500. But the added bonus is that you also get the intangible qualities of Buffett’s mindset, along with the unmatched expertise of his portfolio management team of Ted Weschler and Todd Combs.

Berkshire’s track record speaks for itself. From 1964 to 2023, Berkshire generated a global gain of 4,384,748%. By comparison, the S&P 500’s gain was 31,223%.

Given that Buffett has managed to produce 20% compounded annual gains on average over several decades, I have a hard time picking another stock over Berkshire itself. I think investors looking for consistent growth over a long-term time horizon while achieving a deep level of portfolio diversification are best off holding Berkshire stock and letting Buffett’s magic do the rest.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. Adam Spatacco holds positions in Apple. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, Chevron and Visa. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.

Warren Buffett’s safest stock might not be Apple or Coca-Cola. 1 other stock that might be a better long-term buy. was originally published by The Motley Fool