13 May Berkshire Hathaway Annual Meeting
On May 2nd, Warren Buffett video conferenced Berkshire Hathaway’s 2019 Annual Meeting. We were all anxious to hear what he had to say about investing the $120+ billion in cash he had on hand. Surely he had scooped up some incredible bargains and repurchased a significant amount of Berkshire Hathaway shares. After all, $120+ billion is a lot of money to be earning .15%. So what did the worlds greatest investor do with all that cash? Nothing! That’s right, he sold all his airline stocks and increased his cash pile to $125+ billion! Wow, that’s not what we were expecting. After all, he was the one that said ‘to be greedy when everyone else is fearful’. Maybe as he approaches his 90th birthday he’s just getting too conservative? Maybe so, but maybe he also believes the Covid-19 shutdown has done a lot of damage to the economy, along with stock values, and he would prefer a greater margin of safety. Berkshire is a window into the American economy – the company owns planes, trains, banks, auto dealerships, real estate brokerage, building products, retail, insurance, utilities, trucking, manufacturing, industrial and wholesale distribution to name a few. I can’t imagine who has a better pulse on America than Warren Buffett. The fact that he did nothing should be a huge ‘caution flag’. I’m not trying to pour cold water on the significant counter rally we are currently experiencing, just saying that I am skeptical the light has turned green. For that to be true, you would think Berkshire Hathaway’s stock should be moving up. It’s not! So until some of the ‘old economy’ stocks decide it’s time to join the technology party, erring on the side of caution seems the prudent thing to do.
Thank you for your trust and I look forward to the day when the financial, energy and transportation sectors begin moving higher!