The Smartest Trillion-Dollar Stock to Buy With $1,000 and Hold Forever

Few companies have achieved a market cap of $1 trillion. All those who have are leaders in their respective industries and generally produce market-beating returns. While one could make an argument for investing in every single one of them, the best of the bunch might be the Warren Buffett-led conglomerate Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). The company, whose class B shares are changing hands for just under $529 apiece, is a brilliant stock to buy with $1,000 and hold forever. Here's why.

The closest to an index fund you'll get

Let's start with a story. In 2007, Buffett bet $1 million that an S&P 500 index fund would outperform a portfolio of hedge funds over a decade, when including the hedge funds' associated expenses. Ted Seides, a hedge fund manager, took the bet -- and lost.

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Here's the morale of the story: It's challenging to beat major indexes like the S&P 500 because these indexes are well-diversified. The S&P 500 is home to corporations across every industry and sector. Some are worth above $1 trillion, some less than $10 billion. Economic downturns affect them differently, so even when some aren't performing well, others are. Most investors looking to buy just one stock are better off "cheating" by getting a basket of them through an exchange-traded fund (ETF) that tracks the S&P 500 or some other major index -- or by purchasing shares of Berkshire Hathaway.

The conglomerate owns subsidiaries across many different industries. Its portfolio of invested stocks adds even more diversification to the mix. Does Berkshire Hathaway rival the S&P 500 in the diversification department? No, it doesn't.

However, you'd be hard-pressed to find a single corporation that gets closer than Berkshire Hathaway in this exercise, and none of the other trillion-dollar companies do. That grants Berkshire Hathaway a significant advantage.

One of the best predictors of success

Some hedge funds sometimes do perform better than the market. The managers that pull it off are highly regarded on Wall Street -- some have become billionaires. That goes to show that a company's leadership team is one of the best predictors of success, even for hedge funds.

And when it comes to outperforming the market, it's hard to get a better leader than Warren Buffett. The Oracle of Omaha has consistently done so for decades. The long-term returns of Berkshire Hathaway put those of the S&P 500 to shame.

BRK.A Total Return Level data by YCharts

Few companies have outperformed the market over this period. Even fewer have done so with the same man at the helm. However, Buffett is well in his 90s. He won't be around forever, which is the holding period we are shooting for. What happens to Berkshire Hathaway in a post-Buffett world? All signs point to the conglomerate sticking to the principles and visions that have led to its success.

Part of being a great leader is raising and mentoring the next generation. Even without knowing much about the inner workings of Berkshire Hathaway -- or who Buffett might have picked as his successor -- we can be reasonably confident that he has worked on that project. But in fact, we have had confirmation for a long time. Greg Abel, the vice-chairman of Berkshire's non-insurance operations, is the chosen successor.

We can go even further. Buffett would have fostered a culture in the company he leads centered around his investing philosophy and other factors that have contributed to his success. He has likely imparted his wisdom to more than just one man. Those who have risen through the company ranks and now hold highly important positions are likely to have soaked up the teachings of the Oracle of Omaha. What will survive after Buffett isn't just one man, whether it's Greg Abel or someone else.

It's a well-established, well-diversified, highly profitable company with capable leaders and priceless intangibles that should drive its performance for many years. That's why, if you want to invest in just one company whose market cap is above $1 trillion, Berkshire Hathaway might be the best pick.

Don’t miss this second chance at a potentially lucrative opportunity

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*Stock Advisor returns as of March 24, 2025

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.