Billionaire investor Warren Buffett, head of Berkshire Hathaway (NYSE:BRK.B) since 1965, has achieved sky-high returns.

Between 1965 and 2023, the S&P 500 index gained 31,223% together with dividends. An index tracker fund held for that lengthy, had they existed on the time, would have wiped the ground with money financial savings.

However then alongside comes Berkshire Hathaway, whose share price soared by an infinite 4,384,748% over the identical interval.

Comply with the chief

I can’t match the investing energy that performs a big half in Warren Buffett’s technique at the moment. And I primarily need to purchase and maintain UK dividend shares. So I wouldn’t purchase the identical shares as these held by Berkshire Hathaway.

However what I can do is use Buffett’s sector and diversification selections to assist information me.

I do fear a bit about my over-concentration on sectors that I see as low-cost. For the previous decade or so, that’s been banking and finance, together with the insurance coverage sector and funding corporations themselves.

However although I’ve held, for instance, Lloyds Banking Group and Aviva for a couple of years now, I’m down on each of them. Properly, truly, I’m getting respectable dividends and I’m not seeking to promote, so the share costs themselves don’t matter an excessive amount of proper now.

Concentrated

Going into 2025, these sectors nonetheless characteristic excessive on my needs record. I just like the look of Authorized & Basic. And I’m additionally eyeing up Barclays with a considered stepping into international company and funding banking.

However I’m additionally cautious of over-concentrating my investments.

A have a look at Berkshire Hathaway’s high 10 holdings is telling. Buffett has at all times understood the finance sector higher than most. And at the moment, 4 of his greatest 10 are finance-related shares, accounting for 37% of Berkshire’s complete holdings.

These 4 are American Categorical, Financial institution of America, Moody’s and Chubb.

What you understand

Taking a look at Warren Buffett’s inventory picks pits two of my key investing axioms towards one another.

One is that diversification factor, which I see as important. I wouldn’t have needed much more of my money in finance when the good banking crash occurred.

However then, what in regards to the previous ‘But what you know’ maxim? It may be fairly a hazard investing in one thing we don’t perceive.

Buffett himself refrained from tech shares for a really very long time, as a result of he didn’t perceive them. He’s realized sufficient since then, thoughts, for Apple to turn out to be Berkshire’s greatest holding at the moment.

Dilemma

Nonetheless, there are many shares that I actually don’t suppose I perceive effectively sufficient to purchase. So I nonetheless face my dilemma. I believe I’ve inadequate diversification, however I solely need to purchase what I do know.

So what do I actually take from Warren Buffett and Berkshire Hathaway as we head into 2025?

Firstly, I’m reassured that I shouldn’t worry investing within the sectors and corporations that I perceive and like the very best.

But it surely’s by no means too late to study. And I must commit time in 2025 to beefing up my data of extra companies. Now, what’s this synthetic intelligence factor all about?