The Warren Buffett ETF Paradox: Why Berkshire Unloaded Its Stake—But You Might Not Want To

When the Oracle’s Actions Don’t Match His Words

Warren Buffett has made one thing crystal clear to average investors: put your money into an S&P 500 ETF and let it work for you over decades. It’s simple, proven, and accessible. Yet, in late 2024, Berkshire Hathaway quietly liquidated its entire position in the Vanguard S&P 500 ETF (VOO).

The contradiction is jarring. Here’s a legend telling the masses to buy what his own $1 trillion company just sold. So what’s really going on? And more importantly—should you care?

Two Different Games, Two Different Rules

The answer hinges on understanding a fundamental truth: Berkshire Hathaway is not you, and you are not Berkshire Hathaway.

When Buffett himself discusses the S&P 500, he’s speaking to everyday investors—people with limited time, limited resources, and limited access to proprietary research. For that audience, broad market exposure through a low-cost index fund makes overwhelming sense. You get instant diversification, minimal fees, and the compound returns of 500 American companies without needing to pick winners and losers.

Berkshire, by contrast, operates in an entirely different universe. The company employs armies of analysts who dissect financial statements, model valuations down to the dollar, and manage astronomical sums of capital. When Berkshire shifts its portfolio, it’s making a macro judgment about relative value—whether VOO offers better risk-adjusted returns compared to alternative investments available to a $1 trillion entity.

That calculation doesn’t apply to you. Your constraints and opportunities are fundamentally different.

Why the Vanguard S&P 500 ETF Still Makes Sense for Most Investors

Strip away the headlines, and VOO delivers three compelling advantages:

Instant Diversification Across Sectors

At 0.03% expense ratio, VOO gives you ownership stakes in roughly 500 of America’s largest, most stable companies. The beauty is you’re not betting on any single sector. Your portfolio spans:

• Information Technology: 34.8%
• Financials: 13.5%
• Consumer Discretionary: 10.5%
• Communication Services: 10.1%
• Healthcare: 8.9%
• Industrials: 8.3%
• Consumer Staples: 4.9%
• Energy: 2.9%
• Utilities: 2.3%
• Real Estate: 1.9%
• Materials: 1.8%

Yes, the “Magnificent Seven” tech giants (Nvidia, Microsoft, Apple, Amazon, Alphabet, Meta, Tesla) now represent around 34% of the fund, reflecting real market dynamics. But that concentration is offset by deep exposure across every meaningful sector of the U.S. economy.

Blue-Chip Quality Built Into the Structure

Getting into the S&P 500 isn’t easy. Companies must meet strict market-cap thresholds and financial health standards. These aren’t speculative plays—they’re established businesses with resilient models. Do they stumble? Absolutely. But the screening process weeds out the weakest and most unstable.

The Simplicity Factor

Building a diversified portfolio of individual stocks requires research, rebalancing, and emotional discipline. VOO does all that automatically. One fund. Hundreds of holdings. Decades of validated returns.

Betting on America’s Long-Term Growth Trajectory

Warren Buffett has said it plainly: “For 240 years it’s been a terrible mistake to bet against America.” That’s not hyperbole—it’s the core thesis behind S&P 500 investing.

When you buy VOO, you’re not speculating on next quarter’s earnings. You’re making a bet that American innovation, capital formation, and entrepreneurship will keep producing winners across sectors for the next 20, 30, or 40 years. History suggests that’s a winning bet.

Since its inception, VOO has delivered the kinds of returns that have quietly built wealth for millions. Past performance doesn’t guarantee future results, but the fund has all the structural advantages it needs to remain a cornerstone holding for long-term investors.

Align Your Investments With Your Reality

The core lesson from Berkshire’s recent moves isn’t “avoid the S&P 500.” It’s “make sure your investments match your situation.”

Your investment strategy should reflect:

• Your personal risk tolerance
• Your actual financial goals
• Your investment timeline
• Your available capital and resources
• Your ability to research and manage holdings

For most people, that checklist points directly to broad-based ETFs like VOO. Buffett’s advice isn’t aspirational—it’s practical. It works because it’s honest about what average investors can actually do.

Berkshire can sell its VOO stake and deploy capital into specialized opportunities you’ll never have access to. That’s not a referendum on the fund’s merit. It’s just a reminder that mega-corporations and individual investors operate by different rules.

Follow Buffett’s advice, not necessarily his minute-to-minute portfolio moves. The distinction matters.