When it comes to investing greats, Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) CEO Warren Buffett is in a class of his own. Growth investors might marvel at Cathie Wood's recent returns, but it's Buffett who's run circles around most investment managers on Wall Street.
According to Berkshire Hathaway's annual shareholder letter, the Oracle of Omaha's company has averaged ... averaged ... a 20% annual return since 1965. That compares to a 10.2% total return (including dividends) for the benchmark S&P 500. This nominal annual difference of 9.8% might not sound like much, but when compounded over 56 years, it equates to an outperformance of the S&P 500 of 2,787,072%!
What's even more striking is that Buffett is achieving these gains without a lot of diversification. The Oracle of Omaha has always believed that diversification is only necessary if you don't know what you're doing.
Following decades of digging into income statements and balance sheets, Buffett and his investing lieutenants -- Todd Combs and Ted Weschler -- have narrowed their interest to three sectors. As of this past weekend, the following three sectors made up 82% of Berkshire Hathaway's $291 billion investment portfolio.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.