How They Make Money

How They Make Money

Share this post

How They Make Money
How They Make Money
📊 Buffett's Portfolio Visualized
Copy link
Facebook
Email
Notes
More

📊 Buffett's Portfolio Visualized

Why the Oracle of Omaha tends to bet on the status quo

App Economy Insights's avatar
App Economy Insights
Oct 10, 2023
∙ Paid
21

Share this post

How They Make Money
How They Make Money
📊 Buffett's Portfolio Visualized
Copy link
Facebook
Email
Notes
More
Share

Greetings from San Francisco! 👋

Over 57,000 How They Make Money subscribers turn to us weekly for business and investment insights. Glad you’re here.


Last week, we discussed the rise of the ‘Magnificent 7.’

Big tech has emerged as a formidable force in the past 15 years. From digitization to cloud migration to artificial intelligence, they represent what is changing in our society.

Investors who favor tech companies tend to seek exposure to disruptive innovation and their potential to challenge the status quo. They offer new opportunities and market expansion.

Conversely, some investors place their bets firmly on the status quo. People who invest in things that are unlikely to change. They want to find already successful businesses and bet their success won’t be disrupted anytime soon.

Warren Buffett and his partner Charlie Munger are the ultimate representation of investors betting on the status quo. Their portfolio at Berkshire Hathaway has been historically focused on the defensive category:

  • 🚊 Railroad (BNSF Railway).

  • 🏦 Big banks (BofA, Citigroup).

  • 🛡️ Insurance (Ally, Aon, Geico).

  • 🥤 Food & Beverage (Coca-Cola, See’s)

  • ⛽ Energy (Chevron, Occidental Petroleum).

  • 💳 Financial services (Amex, Visa, Mastercard).

Why? Historically known for his preference for value investing, Buffett focuses on companies with consistent revenue streams and strong economic moats that make them unlikely to be disrupted.

 🏰 The Art of Spotting Economic Moats

🏰 The Art of Spotting Economic Moats

App Economy Insights
·
March 17, 2023
Read full story

He uses a basketball analogy:

“I'm like a basketball coach, and If I walk down the street, the first thing I'm looking for is seven footers. Once I find the seven-footer, I still gotta figure out whether he is coordinated or not and whether I can keep him in school and all those things.

But if some guy comes up and says, you know, he's 5'6," and he says, wait until you see me handle the ball and all that. I'm not looking for those guys.”

Buffett wants to be extremely certain about the competitive advantage of the business, the integrity and ability of management, and have a good grasp of future cash flows. It’s not that he's averse to tech, but he finds it more susceptible to disruption and believes it offers less visibility on future earnings.

Apple was more than half of Buffett’s portfolio at Berkshire at the end of June. While it might seem like a deviation from his strategy, we need to look closer (more on that in a second).

This post is for paid subscribers

Already a paid subscriber? Sign in
© 2025 App Economy Insights LLC
Privacy ∙ Terms ∙ Collection notice
Start writingGet the app
Substack is the home for great culture

Share

Copy link
Facebook
Email
Notes
More