Buffett says Berkshire’s success has more to do with being ‘healthy’ than ‘smart’

Buffett simply said that the… Berkshire Hathaway BRKB strategy revolves around making rational decisions and investing for the long term.
“It’s not because we’re smart. It’s because we’re healthy,” Buffett said at the meeting of… Berkshire BRKA investors.

Buffett brushed aside compliments from one questioner about how he timed the stock market so well. Buffett said he never really knows what stocks or the economy will do in the short term.

He also joked that his bullish bets on the market often look bad at first, saying that in 2008 during the Great Recession, he spent much of his fortune buying stocks in “a terrible time…a really stupid time.” Berkshire has invested in Goldman Sachs GS and General Electric GEalongside other blue chips, before the market finally bottomed out in March 2009.

“We never timed anything,” Buffett said, adding that the success of the company’s long-term “buy and hold” investment strategy is “easy.”

Both Buffett and Berkshire vice chairman Charlie Munger lamented how speculators have seemingly taken over Wall Street. Munger described the casino-like atmosphere and Buffett called the market a “gambling parlor.”

Inflation worries but praise for Powell

Buffett did not discuss this year’s market volatility at length during the meeting. But he did say that inflation is a big problem, one that “almost everyone lights up.”

And he praised Federal Reserve chairman Jerome Powell for his actions to combat the Covid-19-induced economic crisis, although some argue that the Fed’s low interest rates have fueled inflationary pressures.

Buffett said Powell was a “hero” because he was aggressive and quickly cut rates at the start of the pandemic instead of watching and “thumb sucking”.

Buffett also hinted that Berkshire could benefit from sell-offs, saying the company “depends” on market behavior that creates mispriced opportunities for the company.

In that sense, Berkshire has been making some aggressive moves lately. The company announced a $11.6 billion insurance company purchase alleghany Yes in March and also recently disclosed major stakes in oil company Occidental Petroleum OXY and tech giant HP HPQ
Berkshire said in its earnings release on Saturday that it would increase its stake in Chevron CVX† The oil giant is now Berkshire’s fourth-largest shareholding, behind only Apple AAPLbank of America BAC and American Express AXP
Buffett also announced at the annual meeting that Berkshire Hathaway has increased its stake in the video game maker Activision Blizzard ATVIA† Berkshire first invested in Activision in late 2021, before Microsoft MSFT announced plans in January to buy the company for nearly $70 billion.

Activision’s share price is below the proposed purchase price. Buffett said he made the decision to buy more of the stock as an “arbitrage” bet that the deal will eventually come through.

These moves come just weeks after Buffett wrote in his annual shareholder letter that he was struggling to find stocks to buy at attractive prices. But following Berkshire’s shopping spree, available cash has fallen from about $147 billion at the end of 2021 to about $106 billion at the end of the first quarter.

Why the change of heart? Munger said in his typically blunt manner that he and Buffett “found some things we liked more than Treasury bills.”

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