Warren Buffett sure knows how to buy a dip!
Back in 2008, during the Global Financial Crisis (GFC), Buffett splashed around US$16 billion investing in big US companies, which went on to make tens of billions in profit. Now, after years of snoozing on the side-lines waiting for bargains, the Berkshire Hathaway (BRK.A, BRK.B) giant has woken up and has been buying the dip like nobody’s business. 🛍️
At the company’s legendary AGM over the weekend, where investors could pre-game with boats, books and Berkshire themed See’s Candies, Buffett described some of the company’s recent buying spree. In the first quarter of 2022, Berkshire splurged more than US$51 billion from their massive cash pile. Buffett’s shopping list included big stakes in oil companies Occidental Petroleum (OXY) and Chevron (CVX), as well as PC maker Hewlett-Packard (HPE), gamers Activision Blizzard (ATVI) and acquiring insurers Alleghany (Y). 🖥️
With the S&P 500 index down around 14% so far this year, is Buffett trying to time the market? 📉 Haha, no. Buffett has long said he never tries to time the market, instead suggesting that ‘the best thing with stocks is to buy them consistently over time’. Buffett stays focused on the value he’s getting for the dollars he’s spending, which happen to sometimes overlap with dips in the market. Buffett told investors ‘We have not been good at timing. We’ve been reasonably good at figuring out when we were getting enough for our money’.
The secret, says Buffett, is to stay ready and keep plenty of cash. 💰 In his 2022 letter to shareholders he said he wanted Berkshire to be ‘financially impregnable’ and they’ll always hold a lot of cash. ‘It’s like oxygen; it’s there all the time, but if it disappears for a few minutes, it’s all over’.