One of the most popular investment strategies for Gen-Z and Millennials is known as “VOO and chill,” which involves buying and holding the Vanguard S&P 500 ETF (NYSE: VOO). Interestingly, this approach is also endorsed by a prominent figure from the Baby Boomer generation, who famously made a successful bet of $500,000 on the S&P 500 Index’s future performance.
Key Takeaways:
– Warren Buffett, despite having various individual investments, has been a strong advocate for S&P 500 ETFs in his personal accounts and Berkshire Hathaway.
– The S&P 500 has shown an average annual return of 10.4% since 1965, supporting Buffett’s endorsement of this index.
– With the help of AI, it is predicted that the Magnificent 7 tech stocks could propel the S&P 500 Index upwards by over 140% in the next 5 years.
– A cash back credit card could potentially earn you significant rewards, with some offering up to 5% cash back, a $200 bonus, and no annual fee.
Warren Buffett’s unwavering support for the S&P 500 Index has been validated by its consistent performance. He even wagered $500,000 in a bet against actively managed hedge funds, highlighting his belief in the index’s strength. This bet resulted in a significant return for Buffett, which was donated to charity.
Looking ahead, the rise of AI is expected to benefit companies involved in AI services, potentially driving the S&P 500 Index to new heights. The current success of the S&P 500 has largely been fueled by tech giants such as Apple, Amazon, Google, Meta Platforms, and Microsoft.
Some of the largest and fastest-growing stocks in the S&P 500 include companies like Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), and Tesla (NASDAQ: TSLA). Together with Berkshire Hathaway, these top 10 companies make up 26% of the total market capitalization of the index. Apple, Nvidia, and Microsoft alone represent 20.3% of the S&P 500’s weighting, valued at approximately $9.7 trillion.
Analysts, including PriceWaterhouseCoopers, foresee significant growth potential in the development of artificial intelligence (AI) by these companies, often referred to as the Magnificent 7. It is projected that AI could contribute up to $15.7 trillion to the global economy by 2030. The adoption of AI technologies such as ChatGPT, Grok, and AI Copilot by businesses is expected to drive substantial growth for these leading companies.
Furthermore, as Millennials and Gen-Z investors who are familiar with investing in funds like VOO approach their peak earning years, there may be a continued trend towards passive investing strategies like “VOO and chill.” This could lead to sustained gains for ETFs like SPY and VOO, potentially resulting in significant returns for investors.
Although Berkshire Hathaway recently divested its direct holdings in SPY and VOO, speculations suggest that this move was made to increase cash reserves for potential investment opportunities. While Berkshire Hathaway no longer holds these ETFs directly, it still maintains significant positions through subsidiaries like General Re. Investors anticipate that Warren Buffett may re-enter the market at opportune times, potentially benefiting from the current levels of SPY and VOO as attractive investment opportunities.
