Warren Buffett‘s annual letter to Berkshire Hathaway (NYSE:BRK.B) shareholders has become the stuff of legend. And I think we can learn more key lessons from him than from any other individual.

Who can ever forget “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price“. That was from the 1989 letter. And it bears on one of the themes from the latest for 2024, a year that saw record operating earnings of $47.4bn.

The market value of Berkshire Hathaway soared 5,502,284% from 1964 to 2024, while the S&P 500 gained 39,054%.

There’s no rush

Berkshire Hathway has amassed an eye-watering sum of $334bn in cash. Topped up from sales of Apple and Bank of America, it’s been hitting the financial headlines all year. So what did the great man say about it?

He said: “Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities. That preference won’t change.“

So no, he hasn’t changed his mind that the stock market is the best possible long-term investment there is. But remember that thing about wonderful companies at fair prices? It seems straightforward to me — if you’re not seeing them now, don’t buy now.

There’s nothing wrong with holding cash when stocks look too high, and keeping it until there are better opportunities. One thing I’m sure all of us know from experience is that we’ll see stock market falls in the future.

“Mistakes – yes, we make them at Berkshire”

Buffett told us: “During the 2019-23 period, I have used the words ‘mistake’ or ‘error’ 16 times in my letters to you. Many other huge companies have never used either word over that span.“

He pointed out that Amazon “made some brutally candid observations” in 2021. But other than that, corporate feedback to shareholders “has generally been happy talk and pictures“.

He was kind enough to spell out the key lesson here for investors: “The cardinal sin is delaying the correction of mistakes or what Charlie Munger called ‘thumb-sucking.’ Problems, he would tell me, cannot be wished away. They require action, however uncomfortable that may be.”

Reinvest, reinvest

“In a very minor way, Berkshire shareholders have participated in the American miracle by foregoing dividends, thereby electing to reinvest rather than consume. Originally, this reinvestment was tiny, almost meaningless, but over time, it mushroomed, reflecting the mixture of a sustained culture of savings, combined with the magic of long-term compounding.“

Does the lesson from that really need any futher explanation? If we keep ploughing our dividends into new shares for long enough, the annual profits we earn from the reinvested cash can come to exceed our returns from the initial investment itself.

And finally, sadly, I’m reminded how good things come to an end: “At 94, it won’t be long before Greg Abel replaces me as CEO and will be writing the annual letters“. But if Warren Buffett reckons Abel is the right man for the job, I’ll still be reading those letters.

The ongoing cost-of-living crisis is devastating Britons’ plans for retirement. Higher bills are giving people less money to invest — in UK stocks and other assets — or to save for their later years.

According to Annuity Ready, just 28% of ‘Generation X’ are on course to meet a savings target “that would allow them to live comfortably throughout retirement“.

This demographic comprises those born between 1965 and 1980.

As a result, a staggering 17% of Gen Xers fear they won’t be able to retire at all, with almost four in five of those (78%) predicting they won’t have enough money saved to stop working.

Could building a portfolio of shares and other exchange-traded securities help them turn around their fortunes?

Retirement fears

Gen Xers say that lack of access to final salary pension schemes, and the fact that auto-enrolment has only been introduced recently, will have an impact on their pension savings. They also voice fears over the future cost of living, along with the level and availability of the State Pension.

The 45-to-60-year-old age group is by far the most pessimistic in the UK. But other demographics are also in danger of missing their savings objectives.

According to Annuity Ready, the percentage of people who are on track for a comfortable retirement stands at:

• 50% for Generation Z (those born between 2001 and 2020)
• 47% for Millennials (born between 1981 and 2000)
• 37% for Baby Boomers (born between 1946 and 1964)

In total, only four in 10 survey respondents say their retirement savings goals are on track.

Buying UK stocks

It goes without saying that the earlier one begins planning for retirement, the better the chances of hitting one’s goals. This is thanks to the mathematical miracle that is compounding, where — over the long term — savers and investors can exponentially grow their wealth by making a return on all their past returns.

However, even Gen Xers who are late to the party can build a healthy nest egg with the right strategy. Investing in UK shares, where someone can realistically target an average annual return of 8%, is one I think’s worth considering.

Let’s say a 45-year-old starts their investing journey by putting £500 a month in British stocks. If they can hit that 8% figure, they’d have built a decent portfolio worth £394,366 by the time they reach the State Pension age of 68.

Trust time

A simple way to target a return like this could be to invest in a UK-listed trust that holds a collection of stocks.

The F&C Investment Trust (LSE:FCIT) is one such investment trust I think’s worth considering. It has holdings in more than 400 companies from across the globe, providing excellent diversification by geography and industry.

Major holdings here include tech giants Microsoft, Nvidia, Apple, and Amazon. This can adversely impact returns during economic downturns. But it has also delivered excellent long-term gains as the digital revolution has continued.

Taking a diversified approach like this provides a chance to generate wealth in a low-risk way. But that’s not to say that returns are mediocre. The F&C trust has delivered an average annual return of around 10.9% over the past decade.

If this continues, a £500 investment here would make our 45-year-old an even larger nest egg than that £394,366 by the time they retire.

Let’s be real. Retail investors like myself that buy FTSE shares in an ISA don’t have too many advantages in the stock market. I don’t have powerful trading software that flashes Buy and Sell signals. I don’t have an army of researchers or a Bloomberg Terminal.

Billionaire hedge fund managers and other institutional investors do enjoy such privileges. They can even get in before a company goes public, buying shares at a lower price. They attend private events, like Davos or Sun Valley, where they can rub shoulders with executives.

Indeed, some have the power to move markets. The latest Warren Buffett buy normally gets an instant uplift as soon as the market finds out. In contrast, my occasional £1,000 here and £600 there doesn’t move anything except my own bank balance.

So what advantages do we everyday investors have, if any? I think there is one. And fortunately it’s arguably the most powerful one of all.

Time

The key advantage — and probably the only one — that retail investors have over the market is patience. In other words, time.

Unlike hedge funds and analysts who tend to be focused on the short term (i.e., the next quarter), I have a multi-year investing horizon. So I don’t have to worry about short-term losses and can hold through downturns.

If someone invests £1,000 a month and achieves a market-beating 12% average return, they would have £1m after 21 years. That return isn’t guaranteed, but it’s far from unachievable. And while a million pounds might be chump change to a billionaire fund manager, it would make a big difference to most everyday investors.

At a basic level then, compounding rewards patience. The longer I stay invested, the bigger the potential returns.

In contrast, large asset managers face pressure to outperform benchmarks. But I don’t need to report to anyone, so I can afford to keep holding through downturns without fear of looking daft. 

Foolish investing

Because I’m a long-term investor, I want to invest in companies that are run by management teams that are similarly long-term-focused.

This is why I hold shares of Scottish Mortgage Investment Trust (LSE: SMT). The FTSE 100 trust invests in what it considers to be the world’s greatest growth companies. Then it holds these stocks, ideally for at least five years, but sometimes much longer.

In fact, Scottish Mortgage has over 40 investments that it has held for more than five years. Not all have been winners, of course. But some like SpaceX, Nvidia (up 1,700%), Spotify (up 330%), Tesla (550%), and Ferrari (195%) have done tremendously well.

Over the past 10 years, the trust’s share price is up more than 300%. That’s obviously a very solid return.

Naturally, there is no guarantee that the next decade will be as fruitful. The managers have identified areas which they think are ripe for explosive growth — artificial intelligence (AI), the space economy, and AI-powered healthcare — but these might not progress as expected.

Also, the shares can be extremely volatile. Or as manager Tom Slater puts it: “The returns we aim to produce for shareholders will appeal to many, but the road travelled in achieving them may not.”

As mentioned though, I’m willing to hold through downturns and volatility. Patience is the real advantage I have.

I’ve just been running my eye over Tesco (LSE: TSCO) shares and found it a soothing experience.

I needed that, because my own portfolio has been wracked by volatility lately. The FTSE 100 maybe be near all-time highs but my stock picks are darting every which way.

My big February winner was Rolls-Royce holdings, up 25%. My stake in Lloyds Banking Group is up 17% over the month.

Sadly, I also hold Glencore and Diageo, which fell 12% and 14% respectively in February. Some days I don’t know whether I’m winning or losing.

Can this FTSE stock keep winning?

I don’t hold Tesco, but wish I did. Watching its steady, solid progress is like being given a cosy back rub after a stressful day.

The Tesco share price climbed 4.3% in February. Over 12 months, it’s up 36%. It’s up 50% over two years and 65% over five years. Nice.

There have been ups and downs along the way, but overall its trajectory is soothingly upwards. So should I add this Steady Eddie to my portfolio of volatile boy racers?

Today, Tesco trades on a price-to-earnings ratio of 16.3. That’s pretty steady. Just a tad above fair value.

The trailing yield is a little low at 3.2%. That’s below the FTSE 100 average of 3.5%. It’s guess that’s what happens when a stock climbs steadily upwards.

The yield is smoothly climbing upwards too. It’s forecast to hit 3.51% in 2025 then 3.86% in 2026. It’s covered exactly twice. Bliss. My back muscles are relaxing just to think of it.

Stock markets have been bouncing around lately, as Donald Trump threatens trade wars. Does Tesco care? Nope. It doesn’t sell anything to the US. The group pulled out of the US back in 2013, after its Fresh & Easy convenience chain flopped. It’s not taken that kind of risk since.

However, that is a reminder of the dark days, and Philip Clarke. But he left in September 2014. Since then, there’s been a distinct lack of drama.

The dividend is perfectly covered

There are risks. To a degree, its calmness is an illusion, because Tesco operates in an intensively competitive sector. Aldi and Lidl continue to give it a run for its money.

Tesco’s market share is back up to 28.5%, according to Kantar. That followed 19 successive periods of gains. It remains leagues ahead of second-placed Sainsbury’s at 15.9%. However, it may struggle to push on from here.

Inflation is proving sticky, which will push up costs. There’s still a risk the UK could fall into recession. Labour’s national insurance hikes are a real bother. As a huge employer, initial reports suggested this could cost Tesco £1bn. In January, CEO Ken Murphy put it at a more modest £250m.

Margins remain perenially tight at 4.1%. They’re expected to ease up to 4.4% this year.

I’m not naive. No stock can stay this calm forever. After its solid run, it could easily slow from here. There will be storms, one day. I still think Tesco shares are well worth considering for long-term income and growth.

The past 12 months have been great for bank shareholders. The Barclays (LSE: BARC), NatWest Group (LSE: NWG), and Lloyds Banking Group (LSE: LLOY) share prices have all surged to multi-year highs.

The Lloyds share price has shot up 54.6% in 12 months and jumped 43.4% over five years:

Barclays shares have rocketed by 81.6% over one year and 106.2% over five:

NatWest stock has beaten both, soaring 101.8% over one year and 148.1% over five:

What’s gone right?

Perhaps these share-price surges aren’t solely due to banks’ management teams and business models? Their improved financial results may be driven by benign economic factors, with all three riding rising tides. In 2024, UK gross domestic product grew by 0.9%, improving on 2023’s 0.4% growth. The unemployment rate also stayed low and currently stands at 4.4%.

Most importantly — and contrary to market expectations — the Bank of England cut its base rate only twice last year. From a 16-year high of 5.25% a year, the Bank cut it to 5% in August and 4.75% in November. This month, it cut again, to 4.5%.

As interest rates stayed higher for longer last year, this boosted banks’ bottom lines. Their net interest margins — the spreads between lending rates and savings rates — beat forecasts. Thus, this added billions to banks’ profits and cash flows.

Trouble ahead?

That said, 2025 may not be such an easy ride for British banks. These five problems could harm their financial outlooks in 2025-26:

1. Rate reductions

The Bank of England is expected to keep reducing its base rate in 2025, further reducing banks’ net interest margins and their profitability. However, strong wage settlements might keep inflation well above the target of 2% a year, preventing aggressive rate-cutting.

2. Loan losses

By and large, individuals and companies paid their debts without problem last year, keeping bad debts and loan losses surprisingly low in 2024. But can this benign trend continue ?

3. Bad behaviour

I’ve sometimes remarked how banks ‘are great at finding landmines with their feet’. Our gaffe-prone banks often lurch from one crisis to another, incurring regulatory wrath, fines, and punishments along the way.

The latest mis-selling scandal involves dealers charging customers hidden commissions when arranging car loans. One estimate is that this swindle might cost £44bn in compensation. Yikes!

4. A housing downturn

In the year to November 2024, the average house price in England and Wales rose by 3% to £306,000. Steady, but not spectacular. Conversely, any pullback in house prices — or a full-blown crash — could harm banks, forcing them to raise lending standards and reduce mortgage volumes.

5. Tech tribulations

Beneath the surface, our modern banking system is built on ancient systems and programs, some dating back to the 1950s. When this creaking financial infrastructure fails, outcomes can be widespread and costly. For example, a massive tech blow-up a month ago froze millions of Barclays customers’ accounts. I expect bigger and more frequent fines for these blunders.

I’ll hold tight

Despite the above concerns, my wife and I will keep the Lloyds and Barclays shares in our family portfolio. After all, both have delivered strong capital gains and juicy dividends, so why sell now? Having said that, these stocks are more expensive than when we bought in 2022, so we won’t buy more at current prices.

The Stocks and Shares ISA deadline lands in just over a month on 5 April, so there’s no time to lose.

Many investors will be looking for FTSE 100 stocks to add to their portfolio in March. They might like to consider Asia-focused bank Standard Chartered (LSE: STAN).

Its shares have been running riot lately. They’re among the best performers in February, jumping 18% over the month.

Incredibly, they’re up 97% over the past 12 months to near a 10-year high.

I love a good momentum stock, but this also poses a problem. Have investors missed out on most of the excitement?

Standard Chartered isn’t the only FTSE bank flying

It’s worth noting that the FTSE 100 banks as a whole have had a stellar year, buoyed by high interest rates and resilient earnings. 

NatWest is up 100%, Barclays up 80%, and HSBC up 50%. Standard Chartered is broadly following sector trends, dramatic as they are.

Latest earnings, published on 21 February, helped propel its share price even higher. Standard Chartered reported an 18% jump in statutory pre-tax profit to $6bn in full-year 2024. This followed a stellar showing in its wealth management and markets business.

It attracted 265,000 new affluent clients, bringing in $44bn of net new money. That’s up 61% on last year.

CEO Bill Winters was upbeat, stating that growth in its core markets of Asia, Africa, and the Middle East should outpace global expansion. 

While that’s exciting, it’s by no means a racing certainty. Emerging markets have massive potential, but they’ve been highly volatile for the last 15 years.

Despite its strong performance, Standard Chartered still looks cheap on a trailing price-to-earnings (P/E) ratio of just 9.5. Again, that’s in line with many FTSE 100 banks. Its price-to-book value has edged up to 0.8. Not quite the bargain it was a year ago.

Has this equity travelled too far too fast?

One thing that sets Standard Chartered apart is its relatively low dividend yield. On a trailing basis, it yields just 2.3%. 

That said, bank yields are sliding as shares rocket. Barclays now yields just 2.75%. NatWest’s is higher at 4.5%, with HSBC the clear winner at 5.73%.

It’s hard to complain about Standard Chartered, given that the board has just announced a 37% increase in its full-year dividend to 37 cents per share.

Analysts forecast the yield will tick up to 2.62% in 2025 and 2.8% in 2026. That’s still on the low side but the board has launched a $1.5bn share buyback. That’s part of a broader plan to return at least $8bn to shareholders between 2024 and 2026. 

That’s a serious commitment and could provide support for the share price going forward.

With such a rapid rise, a pullback wouldn’t be surprising. In fact, the 15 analysts offering one-year share price forecasts have produced a median target of just over 1,181p. If correct, that’s a drop of almost 7% from today. That surprised me — most forecasts for FTSE 100 stocks have been in positive territory. At least the ones I’ve checked.

I still think Standard Chartered is well worth considering with a long-term view. It’s a personal decision though.

I’m hoping to buy HSBC in March. There’s too much crossover for me to buy both.

Cash ISAs can be very useful in certain circumstances. For example, if you are likely to need access to your savings (for a house deposit or for retirement living expenses, for example) in the next few years, they can be a good way to save securely. However, if one is saving for a long-term goal such as retirement, investing in the stock market can be a far more effective financial strategy. Here’s why.

Higher returns than cash savings

A lot of people in the UK see stock market investing is risky. And in the short term, it can be.

Share prices move around from day to day. So, when you invest in stocks, the value of your investment can fall.

But here’s the thing. Over the long term (10 years+), stock market indexes almost always rise. And typically, the returns generated by the market are higher than those from cash savings.

For example, over the last decade, the UK’s FTSE 100 index has returned about 6% per year. Meanwhile, the US’s S&P 500 index has returned more than 10% per year (in US-dollar terms).

It’s worth pointing out that for much of this 10-year period, Cash ISAs were paying a maximum of about 1% interest. So, those in stocks have generally done much better than those in cash products over the last decade.

Beating inflation

Given their higher returns, stocks can help investors beat inflation (the steady increase in the prices of goods and services over time). Doing this is important if one wants to get ahead financially.

Inflation is often called the ‘silent wealth destroyer’. That’s because it can quietly erode one’s buying power.

Today, UK inflation is running at about 3%. This means that anyone with a Cash ISA paying 4% is only making a 1% return in ‘real terms’ (after inflation).

That’s not a big return. In other words, one is hardly getting ahead when price increases are considered.

The potential for life-changing returns

Investing in the stock market also offers the chance to achieve life-changing gains.

Just look at Apple (NASDAQ: AAPL) shares. Thanks to the success of the iPhone (and the iPod before it), its share price has risen from around $1.50 to $247 over the last 20 years.

That means that anyone who put $5,000 into the stock (it’s listed in the US) back then and held it for the long term would now have around $800,000 (about £635k). Investors would also have received some income from dividends.

That’s a huge return. And for most people, that kind of money would make a material difference to their quality of life in retirement.

Now, I own Apple shares and I think they could go on to generate solid returns in the years ahead as the world becomes more technological. I like the fact the company has so many consumers locked into its ecosystem.

However, if one is thinking about buying individual shares, I think there are better opportunities to consider today. At present, Apple sports a high valuation and this doesn’t leave much room for setbacks such as slower iPhone sales growth or loss of market share to competitors like Meta.

The good news is that the market is throwing up lots of exciting opportunities at the moment. You can find plenty of investment ideas to consider right here at The Motley Fool.

The Nvidia (NASDAQ: NVDA) share price is up and down at the best of times. Lately though, it’s clicked into a higher gear of volatility.

At the end of January, it plunged 17% in one day due to concerns about DeepSeek R1, an open-source Chinese large language model purportedly trained on less powerful chips and a shoestring budget. Then it surged 20%, before slumping 14% over the past week.

What’s going on here? Let’s take a look.

Eye-popping growth

Over the past two years, Nvidia has reported blowout quarterly earnings results. This has generally wowed investors and the share price has soared in response to each report (up 400% in two years!).

However, since the AI chipmaker reported its Q4 and fiscal 2025 results on 26 February, the reaction has been different. The stock hasn’t risen sharply. In fact, it fell 8.5% yesterday (27 February).

At first glance, this might seem confusing. Full-year revenue skyrocketed 114% year on year to $130.5bn, while earnings per share surged 147%.

Importantly, demand for Nvidia’s latest Blackwell chips is “amazing“, according to management. Blackwell delivered $11bn in revenue in Q4, the company’s fastest production implementation ever.

CEO Jensen Huang said: “We’ve successfully ramped up the massive-scale production of Blackwell AI supercomputers, achieving billions of dollars in sales in its first quarter. AI is advancing at light speed as agentic AI and physical AI set the stage for the next wave of AI to revolutionise the largest industries.”

Agentic AI can make intelligent decisions in software without human supervision, while physical AI extends this capability to the real world, enabling machines and robots to perform tasks independently.

This shows how Nvidia’s GPUs have an incredibly wide range of applications — gaming, robots, self-driving cars, the multiverse, and more. I find this optionality incredibly attractive.

Valuation

Unlike Palantir, an AI stock that is still very highly valued even after a 30% fall, Nvidia’s current valuation looks cheap on some metrics.

The forward price-to-earnings (P/E) ratio, for example, is just 27. For context, Apple‘s forward P/E multiple is 32, despite the iPhone maker growing in the single digits.

Meanwhile, the P/E-to-growth (PEG) ratio, which factors in Nvidia’s expected growth, is below one. On this basis, the stock looks great value.

AI spend

However, it’s worth asking why the market isn’t affording the stock a higher premium. Some investors are worried that the current rate of capital expenditure on AI infrastructure is unsustainable. I think this is the main medium-term risk here.

Microsoft, for instance, still plans to spend over $80bn on AI in its current fiscal year (which ends in June). Yet it recently said it “may strategically pace or adjust our infrastructure in some areas“. Is that a hint of what is to come? Only time will tell, but it’s worth considering.

Ultimately, ongoing spending on AI will depend on growing customer demand and tangible returns. Investors haven’t started to demand proof that the hefty AI spend is worth it yet, but that will happen. We know that OpenAI is still losing money even on its $200-per-month ChatGPT Pro subscriptions!

Nvidia stock is down 20% from its all-time high and is flat over eight months. But I think it could fall further this year, so I’m waiting a bit longer before I consider investing.

Investors are spoilt for choice when it comes to FTSE 100 dividend stocks. Even though the blue-chip index climbed almost 1.5% in February, there are still bargains to be had. 

Here are three that an investor might consider adding to their portfolio over the next month. All yield more than 5%. And two are really cheap.

Schroders shares have struggled

Let’s start with the most expensive, investment manager Schroders (LSE: SDR). Its shares have had a torrid time, and although they’ve picked up in recent weeks, they’re still down 4.5% over one year and 26% over five.

I’d have expected them to be really cheap as a result, but the price-to-earnings ratio of 15.1 is in line with the FTSE 100 average. Profits have been bumpy. Schroders also suffered £2.3bn of outflows in Q3, although assets under management climbed to £663.8bn.

Schroders has been hit by volatile markets, most recently triggered by Trump’s trade tariff threats. As an active fund manager, Schroders also faces the threat from soaring demand for exchange-traded funds (ETFs). Yet with a high trailing yield of 5.78%, income seekers may be dazzled.

Broker RBC Capital Markets reckons Schroders’ new CEO can accelerate growth. Time will tell. While investors wait, at least they have that income.

Rio Tinto has a brilliant yield

The mining sector has had a bumpy few years, as demand from China has plunged. Despite some signs of progress, I don’t expect China to suddenly fly.

The Rio Tinto (LSE: RIO) share price is down 6% over 12 months, but now looks a real bargain with a P/E ratio of just 9.1.

Again, the global slowdown and Trump tariffs are hitting sentiment. On 20 February, Rio Tinto posted its weakest earnings in half a decade. They dropped from $11.76bn in full-year 2023 to $10.87bn in 2024, largely due to lower iron ore prices. Net debt was higher than predicted at $5.5bn. 

It’s been a lean few years for Rio Tinto investors. During much of that time, the P/E was low without attracting bargain seekers. However, it operates in a cyclical sector that should swing back into favour at some point. Investors may need patience though. While they wait, Rio’s bumper 6.61% yield may compensate.

The HSBC share price is flying

In contrast to these two strugglers, Asia-focused bank HSBC Holdings (LSE: HSBA) has been bombing it. The shares have rocketed 50% in the last 12 months, and 72% over five years.

This is a trend across the FTSE banks. And like its rivals, HSBC still looks nicely valued trading at just 9.2 times earnings. Investors will be tempted by its 5.7% trailing yield and a further $2bn in share buybacks.

HSBC has exposure to the struggling Chinese economy, while Trump tariffs are a concern. Falling interest rates could squeeze margins too.

Of the three, I consider HSBC the most promising. Even though it shares might slow at some point after a strong run. Rio Tinto could spring a surprise, when global sentiment finally picks up. As for Schroders? It’s been struggling for so long I’m wary of calling the bottom. Great yield though. I’d only consider any of these dividend stocks with a minimum five-year view. These are volatile times.

Even those with only a slight interest in the stock market will probably be aware that Tesla (NASDAQ: TSLA) stock has been in freefall since the beginning of 2025. But while some Fools may be rubbing their hands at the prospect of buying in at a lower price, I’m more inclined to increase my holding in a certain FTSE 100 share instead.

How low can Tesla go?

We can be fairly confident in saying that Tesla’s share price woes can be attributed to two things: Musk’s questionable involvement in Donald Trump’s administration and increasing competition in the electric vehicle space.

This has now started filtering down to the numbers. Sales in Europe and the UK fell by 45% in January with less than 10,000 vehicles being registered. This doesn’t exactly bode well for Tesla’s next earnings update (probably in April).

Quite where the shares find support is impossible to know. But signs that Musk is re-focusing on his business interests over his political aspirations and taking the fight to rivals such as Chinese firm BYD would probably help. As a rule, investors tend to have short memories so long as things get back on track. The risk here is that Musk has done so much damage to his own brand that a swift recovery is off the cards.

Fortunately, there is another option for growth-focused investors like me.

Brilliant timing or lucky break?

Up until recently, Tesla was one of the largest constituents in the FTSE 100-listed Scottish Mortgage Investment Trust (LSE: SMT). This made perfect sense. After all, the trust is devoted to finding and holding the most ‘disruptive’ firms in the world. And regardless of how one feels about Musk, it would be hard to argue that his electric car firm shouldn’t make the cut.

Fast forward to the trust’s latest factsheet (dated 31 January), however, and Tesla no longer features in the top 10 biggest holdings. Interestingly, another, more traditional car manufacturer – Ferrari – does.

Now, whether managers Tom Slater and Lawrence Burns saw the writing on the wall or their decision to sell down their position in Tesla just happened to be seriously well-timed is open to debate. All we know is that the trust’s share price is up 8% in 2025, outperforming the FTSE 100. Tesla stock is down over 25%.

Of course, a general market sell-off could still be bad news for Scottish Mortgage holders like me. A diversified portfolio can only cushion the blow by so much. The last few years have shown just how far even a fund like this can fall if sentiment towards glitzy growth stocks changes.

Moreover, its largest position remains Musk’s (non-listed) SpaceX. So, a sustained revolt against all-things-Elon wouldn’t be ideal.

I’m thinking of buying more

All that said, I’m a long-term investor looking to grow my wealth over decades. Goodness knows how many presidents will pass through the White House over that time. What I am more confident about is that the desire/need for innovation in the world will continue. This is regardless of the companies and leaders that drive it.

This is why I’m considering adding to my position in Scottish Mortgage.

Tesla stock? I’ll leave that to those with stronger stomachs.