Buffett simply said that the strategy of Berkshire Hathaway (BRKB) is to make rational decisions and invest in the long run. “It’s not because we’re smart. That’s because we’re smart, “Buffett said during a meeting of investors in Berkshire (BRKA).
Buffett dismissed compliments from an inquirer about how he measured the stock market so well. Buffett said he never knew what stocks or the economy would do in the short term.
He also joked that his rising market bets often looked bad at first, saying he spent much of his net worth in 2008 during the Great Recession, buying shares in “terrible times … really stupid weather. ” Berkshire invested in Goldman Sachs (GS) and General Electric (GE), among other blue chips, before the market finally bottomed out in March 2009.
“We have never reported anything,” Buffett said, adding that the success of the company’s long-term buying and holding investment strategy was “simple.”
Both Buffett and Berkshire Vice President Charlie Munger complain that speculators have seemingly taken over Wall Street. Munger described the atmosphere as casino-like, and Buffett called the market a “gambling parlor.”
Concerns about inflation, but praise for Powell
Buffett did not talk long during the meeting about this year’s market volatility. But he said inflation was a big problem that “deceived almost everyone”.
And he gave a standing ovation to Federal Reserve Chairman Jerome Powell for his efforts to combat the economic crisis caused by Covid-19, although some say the Fed’s low interest rates have helped fuel inflationary pressures.
Buffett said Powell was a “hero” for being aggressive and was rapidly reducing rates at the start of the pandemic instead of sitting and “sucking his thumb.”
Buffett also hinted that Berkshire could benefit from the sell-offs, saying the company was “dependent” on market behavior, which created incorrect prices for the company.
Thus, Berkshire has made some aggressive moves recently. The company announced a $ 11.6 billion acquisition of insurance company Alleghany (Y) in March and also recently unveiled large stakes in oil company Occidental Petroleum (OXY) and technology giant HP (HPQ). Berkshire said in a statement on Saturday that it had increased its stake in Chevron (CVX). The oil giant is now Berkshire’s fourth-largest holding company, behind only Apple (AAPL), Bank of America (BAC) and American Express (AXP). Buffett also revealed during the annual meeting that Berkshire Hathaway has increased its stake in video game maker Activision Blizzard (ATVI). Berkshire first invested in Activision in late 2021, before Microsoft (MSFT) announced plans to buy the company in January for nearly $ 70 billion.
Activision’s share price is below the proposed takeover price. Buffett said he had decided to buy more of the shares as an “arbitrage” pledge that the deal would eventually be made.
These moves come just weeks after Buffett wrote in his annual letter to the shareholder that he was having difficulty finding stocks to buy at attractive prices. But after buying Berkshire, cash fell 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, in his typically dumb way, said that he and Buffett “found some things we preferred to have over government bonds.”
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