Buffett dismissed the compliments of a questioner about how the stock market works so well. Buffett said he never really knew what stocks or the economy would do in the short term. He also joked that his uptrend in the market often looks bad at first, saying he spent much of his net worth in 2008 during the Great Recession buying shares in “a terrible moment … a really silly moment”. Berkshire invested in Goldman Sachs (GS) and General Electric (GE), including blue chips, before the market finally bottomed out in March 2009. “We have never timed anything,” Buffett said, adding that the success of the company’s long-term “buy and hold” investment strategy is “simple”. Both Buffett and Berkshire Vice President Charlie Munger lamented how speculators seem to have taken over Wall Street. Munger described the casino-like atmosphere, and Buffett called the market “gambling.”
Inflation worries but praise for Powell
Buffett did not speak at length during the meeting about this year’s market volatility. But he said inflation was a big problem, a problem that “scams almost everyone”. And he praised Federal Reserve Chairman Jerome Powell for his efforts to combat the Covid-19 financial crisis, although some have argued that the Fed’s low interest rates helped fuel inflationary pressures. Buffett said Powell was a “hero” because he was aggressive and quickly reduced rates at the beginning of the pandemic instead of sitting and “sucking his thumb”. Buffett also hinted that Berkshire could benefit from the sales, saying the company “depends” on market behavior that creates opportunities for the company at bad prices. In these lines, Berkshire has made some aggressive moves lately. The company announced a $ 11.6 billion acquisition of insurance company Alleghany (Y) in March and also recently revealed large stakes in oil company Occidental Petroleum (OXY) and technology giant HP (HPQ). Berkshire said in its earnings statement on Saturday that it had increased its stake in Chevron (CVX). The oil giant is now Berkshire’s fourth largest share, after 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 company Activision Blizzard (ATVI). 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 lower than the proposed takeover price. Buffett said he decided to buy more of the stocks as a “refereeing” bet that the deal would eventually be finalized. These moves come just weeks after Buffett wrote in the shareholder’s annual letter that he was having a hard time finding shares to buy at attractive prices. However, following Berkshire’s overeating, its cash flow fell from about $ 147 billion at the end of 2021 to about $ 106 billion at the end of the first quarter. Why the heart change? Munger, in his typically crude way, said that he and Buffett “found some things we preferred to hold in the treasury.”
