Thought you got hammered in the market? Despite the fact that Warren Buffett has an excellent track record of navigating market crashes, take a look at The Oracle of Omaha’s portfolio, and you might feel a lot better about yours:
|% of Total||Performance (%)|
|Ticker||Company Name||Portfolio||YTD||Since 2/19|
|BAC||Bank of America||11.26||-42.91||-42.10|
|BK||Bank of New York Mellon||1.48||-39.31||-33.93|
|DAL||Delta Air Lines||1.13||-55.73||-56.06|
|GS||Goldman Sachs Group||1.09||-34.88||-36.91|
|Weighted Average of 20 Largest Holdings||-27.23||-30.71|
|Entire Portfolio Holding||-34.82||-36.62|
In March Warren Buffett said that in all his years in the market, he had never seen anything like the coronavirus pandemic. “If you stick around long enough, you’ll see everything in markets,” he told Yahoo Finance. “And it may have taken me to 89 years of age to throw this one into the experience.”
But before you shed a tear for Buffett and his multinational conglomerate holding company Berkshire Hathaway, let’s try and remember that they’re fortunate enough to be sitting on a $125 billion heap of cash just waiting to snap up investments at bargain basement prices.
Because that’s exactly how Buffett has made big money in the past, from the bear market of 1974 to the financial crisis of 2008. “Be fearful when others are greedy,” he famously advised, and “be greedy only when others are fearful.”
On the other hand, as seen above, Berkshire faces plenty of risks and issues with the company portfolio. From badly timed recent bets on airlines to holding a substantial amount of financially sensitive stocks, particularly within the banking sector.
The Richest Investor in The World Is Yet to Be Greedy
So, what has ol’ Warren been up to while stocks have been crashing these recent weeks? As the world’s most famous investor, Warren Buffett should be feeling like a kid in a candy store.
But Buffett has been unexpectedly quiet, as times like these are typically when he makes his biggest moves given his penchant for making fortunes during economic downturns and keen instinct for spotting bargains.
Instead, he’s been making moves in the shadows that suggest the worst of this crisis may be far from over.
Several behind the scene manoeuvres taken by Berkshire during the latest bear market include filing a prospectus to sell senior notes into the bond market and selling off $388 million in airline stocks, apparently with the intent to continue to add on to his cash stockpile before making as many smart investments as he can at the first opportunity.
Warren Buffett’s Best Coronavirus Stock This Year
Although the Oracle of Omaha has yet to make a big splash in the stock market – or really any splash at all amidst the coronavirus market slump, that doesn’t mean we can’t take a look at Buffett’s best performing stock- not surprisingly, Amazon.
Since becoming a necessity rather than a luxury in the wake of stay-at-home orders, the e-commerce giant’s stock made more for Buffett this year than any other he owns: $58 million.
Yes, this is a drop in the bucket for Berkshire, as Amazon accounts for just 0.6% of the holding company’s U.S.-listed portfolio. But still, it’s encouraging to see Amazon’s stock up nearly 6% this year despite the wider stock market crash – giving investors invested in the company something to smile about.
Taking a closer look at Amazon, while mostly known for its global e-commerce dominance, much of the company’s growth is expected to come from its other segment — Amazon Web Services (AWS) — its cloud computing operation, which carries as impressive 26% operating income margin. Add to that more high-growth areas like streaming video, digital advertising, and cashier-less retail checkout technology, and it’s easy to see why many within the market are bullish on Amazon. However, these are uncertain times and it is impossible to know how any stock will be negatively or positively affected.
It’s been hard. But not just for you and me. While Buffett may be a master of investing, he’s having a tough year, too. That’s why even investors like him are sitting patiently on the sidelines while waiting for the coronavirus stock market crash to subside before making the next major move.
So, don’t worry, if it’s good enough for Buffett, it’s perfectly ok if you decide to do the same yourself.