The Berkshire Hathaway annual shareholders meeting is always a big deal, as tens of thousands of fans fill a stadium to hang on to every pearl of wisdom proffered by the great investor. By comparison, UK meetings are often so sparsely attended that they could in fact now be the easiest place in the country to practice social distancing – something shareholders here ought to consider redressing before bemoaning the state of UK company and fund management.
This year Mr Buffett’s fans have had to assemble virtually, a reminder that if ever there was a time when we needed a good dose of his folksy wisdom to cheer us all up it is now. How would the Sage be turning this crisis into opportunity, as he did in 2008 and many times before?
It seems he isn’t yet, much to the disappointment of the many investors who desperately want their belief confirmed that we are amid a mere temporary stock market blip and that now is the time to buy, buy, buy. Having lost a record $50bn in its first quarter and crystallised a massive loss on airline stocks most were surprised he had bought in the first place, Mr Buffett is keeping his $137bn of powder dry. “We haven’t done anything because we don’t see anything that attractive to do,” he said. There’s classic Buffett lesson one: just because something is 10 per cent cheaper than yesterday does not always make it a bargain. As he once said, “you don’t have to swing at everything”.
But where, some have asked, is the Warren Buffett of old who famously got greedy when others were fearful? The answer is, still here – albeit sensibly at the end of a videoconference – and sticking to his safety-first principles. “Our position will be to stay a Fort Knox,” he said. “The range of possibilities on the economic side are still extraordinarily wide... I don’t believe anyone knows what the market is going to do tomorrow, next week, next month, next year.”
There are lessons two and three – first and foremost don’t lose money trying to chase profits by second guessing the short-term gyrations of markets, especially, as Mr Buffett observed, because the pandemic could change the way people and businesses behave in unpredictable ways. And it’s consistent with his oft-repeated mantra that markets will deliver rewards to the patient investor – particularly the US markets we’re increasingly looking at in this magazine. As he put it: “Nothing can basically stop America”, and that’s lesson four – looking past this crisis, you can’t afford not to have exposure to its many brilliant companies. You can be sure Mr Buffett will be buying more of them when the time is right.
