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Wall Street has made a strong comeback in recent weeks, with the S&P 500 and Dow Jones making new 2023 highs, erasing all losses made during summer. Bets that the Fed might be nearing the end of its rate hike cycle have bolstered investors’ confidence in the market lately (read: 5 Stocks That Powered S&P 500 ETF This Year).
Additionally, a significant portion of market gains can be attributed to the strong performance of a group of large-cap stocks, referred to as the "Magnificent Seven." This group comprises Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), Nvidia (NVDA), Meta Platforms (META) and Tesla (TSLA). However, the Fed uncertainty and geopolitical tensions are lingering. Given this, most investors want to invest like billionaires.
We have highlighted some smart stock selection techniques and the most appropriate ETFs that fit each category for those investors:
Invest in Apple
The legendary investor Warren Buffett continued to love Apple and its iconic bet on the stock has ballooned to $177 billion in value, a figure that exceeds the market capitalizations of Nike ($175 billion), Disney ($168 billion) and Wells Fargo ($164 billion). As of third-quarter 2023, the Buffett portfolio was valued at more than $313 billion, with a significant concentration in its top 10 holdings (91.93%). Its largest holding was Apple, with more than 915 million shares (read: Apple Regains $3T in Market Cap: ETFs in Focus).
ETFs with the largest exposure to Apple, such as Technology Select Sector SPDR Fund (XLK - Free Report) , Vanguard Information Technology ETF (VGT - Free Report) and MSCI Information Technology Index ETF (FTEC - Free Report) , should be the most compelling picks. Apple makes up more than 20% of assets in each of these ETF portfolios. These funds have a Zacks ETF Rank #1 (Strong Buy).
Bet on Big Tech
Billionaires David Tepper believes that the strength of tech titans will continue. He exited his position at Apple in the third quarter but loaded up other tech stocks. Five of the "Magnificent Seven" stocks made it to his top five holdings — Meta Platforms, Microsoft, Amazon, Nvidia and Alphabet — and account for nearly half of its investment portfolio.
Meanwhile, Stanley Druckenmiller purchased Alphabet shares following the company's third-quarter earnings dip and increased his holdings in Microsoft, according to his latest 13F filings. Druckenmiller's portfolio remains heavily weighted toward technology stocks, with Nvidia, Coupang, Microsoft, Eli Lilly and Tech Resources being his top five holdings.
Tepper also added positions in ARK Innovation ETF (ARKK - Free Report) , indicating a focus on disruptive technologies. ARK Innovation ETF is an actively managed fund investing in companies that benefit from the development of products or services, technological improvements and advancements in scientific research related to the areas of DNA Technologies and Genomic Revolution, Automation, Robotics, Energy Storage, Artificial Intelligence, Next Generation Internet, and Fintech Innovation.
Focus on AI and Chips
Druckenmiller has shifted his focus toward artificial Intelligence (AI), with significant investments in Nvidia, despite reducing his stake. The Global X Robotics & Artificial Intelligence ETF (BOTZ - Free Report) seems another exciting pick to tap the strategy.
Druckenmiller is betting on other chip stocks, notably Intel Corp (INTC), Micron Technology (MU) and Qualcomm Inc. (QCOM). These three stocks cumulative make investments of $274 million. Among the few ETFs targeting the semiconductor sector, VanEck Vectors Semiconductor ETF (SMH - Free Report) and iShares Semiconductor ETF (SOXX - Free Report) are the popular ones. These have a Zacks ETF Rank #1 (read: Semiconductors Lead Decade's Top Gainers: 3 ETFs Up At Least 550%).
Consumer Discretionary Looks Bright
Another billionaire investor, Bill Ackman, showed a strong interest in the consumer discretionary sector in the third quarter, with substantial investments in Lowe’s Companies (LOW) and Chipotle Mexican Grill (CMG), reflecting confidence in the U.S. economy.
Zacks ETF Rank #1 Vanguard Consumer Discretionary ETF (VCR - Free Report) and Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , which offer broad exposure to the sector, appear as intriguing choices.
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Invest Like Billionaires With These Stocks & ETFs
Wall Street has made a strong comeback in recent weeks, with the S&P 500 and Dow Jones making new 2023 highs, erasing all losses made during summer. Bets that the Fed might be nearing the end of its rate hike cycle have bolstered investors’ confidence in the market lately (read: 5 Stocks That Powered S&P 500 ETF This Year).
Additionally, a significant portion of market gains can be attributed to the strong performance of a group of large-cap stocks, referred to as the "Magnificent Seven." This group comprises Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), Nvidia (NVDA), Meta Platforms (META) and Tesla (TSLA). However, the Fed uncertainty and geopolitical tensions are lingering. Given this, most investors want to invest like billionaires.
We have highlighted some smart stock selection techniques and the most appropriate ETFs that fit each category for those investors:
Invest in Apple
The legendary investor Warren Buffett continued to love Apple and its iconic bet on the stock has ballooned to $177 billion in value, a figure that exceeds the market capitalizations of Nike ($175 billion), Disney ($168 billion) and Wells Fargo ($164 billion). As of third-quarter 2023, the Buffett portfolio was valued at more than $313 billion, with a significant concentration in its top 10 holdings (91.93%). Its largest holding was Apple, with more than 915 million shares (read: Apple Regains $3T in Market Cap: ETFs in Focus).
ETFs with the largest exposure to Apple, such as Technology Select Sector SPDR Fund (XLK - Free Report) , Vanguard Information Technology ETF (VGT - Free Report) and MSCI Information Technology Index ETF (FTEC - Free Report) , should be the most compelling picks. Apple makes up more than 20% of assets in each of these ETF portfolios. These funds have a Zacks ETF Rank #1 (Strong Buy).
Bet on Big Tech
Billionaires David Tepper believes that the strength of tech titans will continue. He exited his position at Apple in the third quarter but loaded up other tech stocks. Five of the "Magnificent Seven" stocks made it to his top five holdings — Meta Platforms, Microsoft, Amazon, Nvidia and Alphabet — and account for nearly half of its investment portfolio.
Meanwhile, Stanley Druckenmiller purchased Alphabet shares following the company's third-quarter earnings dip and increased his holdings in Microsoft, according to his latest 13F filings. Druckenmiller's portfolio remains heavily weighted toward technology stocks, with Nvidia, Coupang, Microsoft, Eli Lilly and Tech Resources being his top five holdings.
The Magnificent Seven ETF (MAGS - Free Report) offers investors precise exposure to the “Magnificent Seven.” It has amassed $20 million in its asset base and charges 29 bps in fees per year (read: Billionaires Bullish on Big Tech: ETFs in Focus).
Tepper also added positions in ARK Innovation ETF (ARKK - Free Report) , indicating a focus on disruptive technologies. ARK Innovation ETF is an actively managed fund investing in companies that benefit from the development of products or services, technological improvements and advancements in scientific research related to the areas of DNA Technologies and Genomic Revolution, Automation, Robotics, Energy Storage, Artificial Intelligence, Next Generation Internet, and Fintech Innovation.
Focus on AI and Chips
Druckenmiller has shifted his focus toward artificial Intelligence (AI), with significant investments in Nvidia, despite reducing his stake. The Global X Robotics & Artificial Intelligence ETF (BOTZ - Free Report) seems another exciting pick to tap the strategy.
Druckenmiller is betting on other chip stocks, notably Intel Corp (INTC), Micron Technology (MU) and Qualcomm Inc. (QCOM). These three stocks cumulative make investments of $274 million. Among the few ETFs targeting the semiconductor sector, VanEck Vectors Semiconductor ETF (SMH - Free Report) and iShares Semiconductor ETF (SOXX - Free Report) are the popular ones. These have a Zacks ETF Rank #1 (read: Semiconductors Lead Decade's Top Gainers: 3 ETFs Up At Least 550%).
Consumer Discretionary Looks Bright
Another billionaire investor, Bill Ackman, showed a strong interest in the consumer discretionary sector in the third quarter, with substantial investments in Lowe’s Companies (LOW) and Chipotle Mexican Grill (CMG), reflecting confidence in the U.S. economy.
Zacks ETF Rank #1 Vanguard Consumer Discretionary ETF (VCR - Free Report) and Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , which offer broad exposure to the sector, appear as intriguing choices.