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Investing is a notoriously noisy industry, but Warren Buffett always cuts through the chaos with his simple yet powerful advice.
One of Buffett’s most overlooked pieces of wisdom is to focus on the right type of business.
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In a letter to Berkshire Hathaway shareholders, he once wrote: “The best businesses are those that can use large amounts of incremental capital at very high rates of return over extended periods of time (1).”
Buffett continued: “The worst kind of business is one that must or will do the opposite, which is to continue to use more and more capital at very low returns.”
Halfway through 2025, Buffett announced his decision to retire from his long-time position as CEO of Berkshire Hathaway at the end of the year(2). As of this writing, he is ranked 10th on the Forbes Real-Time Billionaires Index with a net worth of $148.1 billion(3).
Here are some great examples of his advice and holdings in action.
Buffett’s largest holding is Apple, the iPhone maker based in Cupertino, California. Although Berkshire has been selling off the company’s stock since 2024, Apple still accounts for 20.5% of Berkshire’s portfolio, more than any other single holding(4).
The continued popularity of the iPhone, coupled with a stable high-margin segment for its services and software, makes Apple an attractive investment.
Most notably, Apple’s return on invested capital (ROIC) is currently around 47% (5). This is the capital efficiency that Buffett calls the hallmark of great investing. This means that for every dollar Apple reinvests in the business, it earns nearly half of its profits each year. This is Buffett’s investment principle.
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Learn more: Warren Buffett turned $9,800 into a $150B fortune using 8 solid, repeatable money rules. Start using them to get rich (and stay rich) today.”
America’s best-known beverage maker has been part of Berkshire Hathaway’s portfolio for decades. Buffett started buying Coca-Cola (KO) stock in 1988. Given that his portfolio currently holds 400 million shares(4), he could earn over $800 million in dividends annually from his holdings. Coca-Cola’s continued dividend payments show that it lives up to Buffett’s motto of using its capital efficiently for investors.
All these years later, KO remains the fourth largest holding in the portfolio, currently accounting for nearly 9% of assets. Coca-Cola maintains its dominant position in the global beverage market thanks to its enduring brand power, global distribution network and continued demand for its core products.
Coca-Cola’s return on investment is about 17%, which is stable but much lower than Apple(6). Although Coca-Cola’s reinvested capital hasn’t generated the same profits, it has proven its strong brand loyalty and steady cash flow over decades. Investors looking for a safe investment may consider adding this Buffett classic stock to their watch list.
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Public has also just launched an AI investing feature to help you understand the latest market trends with real-time insights.
In addition to turning to Buffett for investing ideas, there are plenty of other great resources that can help you get the most out of your investing strategy.
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