Simply following the money when investing in the market isn’t always the smartest idea. Many individual investors align with investments that seasoned billionaires make, thinking that they might become as successful as they are. However, you should know that even the most experienced billionaire investors make massive mistakes.
Personally, I would consider following the philosophy behind the picks that the big sharks might make when betting on the market. Though I would not try to align my investment portfolio with theirs unless the due diligence I do also matches up.
Following the smart money is where the game is at, and that does not necessarily mean going in blindly and investing whatever you can in companies like Amazon (NASDAQ: AMZN).
I am not a fan of following individual trader advice or trying to nibble at the leftover returns from success stories like Amazon stock, well after the best time to invest has passed. If I want to bet on the market, I would pick something safe but with plenty of potential, like Brookfield Corp. (TSX: BN). Mind you, it does not have as big a name as the likes of Amazon, but it isn’t a stock to shrug aside as a Canadian investor.
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Drop Amazon and pick up Brookfield?
Brookfield is one of the most successful Canadian companies of all time. It might not be the biggest one in terms of market capitalization, but the $146.1 billion market-cap stock is right up there. The company controls a portfolio of partially owned subsidiaries and a network of funds that come together to become what might be considered the largest Canadian private entity.
A quick look at its portfolio will show you that Brookfield has a lot going for it. It has several subsidiaries like Brookfield Infrastructure Partners, Brookfield Renewable Partners, and more, that are at the epicentre of several major global developments across different industries. Through these, Brookfield has a hand in several global industries.
The most valuable aspect that Brookfield offers is how the company manages its debt. Rather, how well it manages the debt. It spreads out the debt across several funds and companies so that Brookfield has around $11 billion in corporate debt despite owning several hundred billion in assets. Attributing debt to its subsidiaries immunizes the company to weakness in specific business segments and improves overall strength and long-term growth potential.
Foolish takeaway
With all the positives going for it, it might seem tempting to have all of your money invested in Brookfield Corp. stock. As much as I like the growth prospects that Brookfield stock offers, there are plenty of growth opportunities available on the TSX. I would consider this high-quality stock a good pillar or foundation for a well-diversified portfolio. I can count on it to provide a significant degree of protection from the capital risk that comes with higher-growth investments. I would never invest everything I can into one stock, but I would consider allocating a good portion of my capital to buying shares of Brookfield Corp. stock and making room for its subsidiaries.
