What Warren Buffett’s stock market strategy suggests

It’s already safe to say that Warren Buffett is not going to overdo the gamestop corporation. Late purchase action. A regulatory filing on Tuesday indicated that the eminent investor was generally skeptical about stocks, with his Berkshire Hathaway Inc., the global pandemic, steeping in values ​​and, more recently, bitter reddit coming back to hoard cash as it hit the broken market.

Berkshire’s investment activity in the last three months of 2020 is ubiquitous, reflecting a confusing and uncertain moment in which the world has found itself – and before the game’stop phenomenon and competitive-stock antics hit the markets in recent weeks.

Buffett’s investment vehicle exited more banking stocks, including JPMorgan Chase & Co., increased its stake in some pharmaceutical giants, but Pfizer Inc. cut its Apple Inc. position and acquired new holdings in Verizon Communications Inc. and Chevron Corp.

This was reversed from the even more extreme sentiment exhibited by Berkshire in the third quarter, when it returned as a net buyer of stocks and bullish on everything from drug makers and Japanese trading houses to 5G wireless technology and the hottest tech of the year. Initial Public Offer: Snowflake Inc. At that point my column headline also announced ‘Warren Buffett Stocks Again’.

We do not know what Buffett’s mentality is now — filed on Tuesday, not January or February — the billionaire will have to make clear next week when he is ready to release his annual letter to Berkshire shareholders.

However, he can gather some things from the breadcrumbs left over in recent months.

For starters, Berkshire seems to be stuck with companies that have clear businesses (as long as they are banks). It now reports shares of both T-Mobile US Inc. and Verizon, which are fully focused on their 5G wireless networks. As Time Warner faces the challenges of consolidating its acquisition, AT&T Inc. has pulled out of that bet and is trying to financially understand its next exploit in streaming-video applications with HBO Max‌. Buffett’s buying mantra has always been to stick with the simple businesses he understands. It also defended Berkshire’s surprise acquisition of Amazon.com Inc. shares in 2019, which was not an investment made by Buffett, but by one of his assistants. “They’re looking for things they understand,” he told the company’s annual meeting that year, referring to money managers Todd Combs and Ted Weschler.

At first, the epidemic seemed to have created favorable conditions for an outstanding buffet market, with the ninth richest man in the world having the potential to rise to the top. Instead, the same sky-values ​​he has held over the past few years may be true in some industries, while others may have achieved lasting success as a result of the crisis.

Game‌stop trading Shenanigans also shows how far the market has moved since the 90-year-old Buffett earned the nickname Oracle of Omaha at one point. Berkshire’s own dividend-unpaid stock has risen 8.6% over the past 12 months, following 18% of the Standard & Poor’s 500’s total return. Berkshire follows the index on a five- and 10-year basis.

Berkshire’s outstanding stock picks over the past 12 months have been a sign of the fascinating evolution of its portfolio in recent years. China electric vehicle maker BYD Co. grew fivefold, followed by Silicon Valley cloud-software company Snowflake, which doubled after opening September trading.

Then there was a company called RH called Restore Hardware. It was a bet that some of us had to scratch our heads at first, but then the epic proved to have timing. In a stroke of luck, Berkshire bought RH earlier than a pandemic, leading good Americans to buy and furnish second homes to escape claustrophobic city life. Berkshire’s RH share may be relatively small — just $ 844 million — but $ 600 million more than it originally bought the stock.

Buffett will share more insights next week, but apparently, during the crisis, he did little to chip in at his company’s $ 6146 billion cash reserve. A contractor who once celebrated for his use of capital began to acquire a new legacy as a penny-pincher — or perhaps the lesson of joining those two hands.

Tara Lachapelle covers Bloomberg Opinion columnist, entertainment and telecommunications business

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