Berkshire Hathaway, led by Warren Buffett, is known for its distinctive approach to investing, grounded in long-term value investing.
Berkshire Hathaway's strategy involves seeking undervalued companies with strong fundamentals and focusing on businesses with stable cash flow.
The company maintains significant cash reserves to capitalize on opportunities during market downturns.
In contrast, the S&P 500 is a market benchmark representing 500 of the largest publicly traded companies in the U.S., providing passive exposure to the stock market.
The S&P 500 offers diversification across various sectors and a passive investing approach, reflecting the general stock market performance.
Berkshire Hathaway has historically outperformed the S&P 500, achieving an average annual return of about 20% compared to the S&P 500's 9-10% over the past five decades.
During market downturns, Berkshire Hathaway's diversified holdings and focus on long-term growth provide more stability compared to the S&P 500.
Berkshire Hathaway follows a value investing strategy with active management, while the S&P 500 offers passive exposure without individual stock selection.
Investors looking for higher returns and are willing to engage in detailed research may prefer Berkshire Hathaway's hands-on approach.
On the other hand, those seeking broad market exposure with lower maintenance and risk may opt for the S&P 500 for a more diversified investment.