There are many things I admire about Warren Buffett. But the one thing that has always impressed me most is his renowned patience. He will wait years and years during a bull market, accumulating a growing cash pile to put to work when the opportune moment arrives.
The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. And if people are yelling, ‘Swing, you bum!,’ ignore them.
Warren Buffett
The opportune moment finally arrived this year, as fear gripped the stock market and valuations plummeted. This led Warren Buffett to come out and take a few swings.
A Buffett buy
Many investors seemed slightly surprised recently when Buffett’s holding company Berkshire Hathaway disclosed a new $4bn position in Taiwan Semiconductor Manufacturing Company (NYSE: TSM). That’s because it’s deemed a ‘tech stock’, and Buffett has traditionally avoided such investments.
However, it’s not that surprising when I think about it. Taiwan Semiconductor is a company that dominates its market as a semiconductor foundry. It’s extremely profitable and therefore pays a dividend. The chipmaker has pricing power and a strong technological edge, giving it competitive advantages.
Finally, when Buffett invested it had lost nearly 40% of its value. In fact, it was trading at a little over 10 times earnings, a bargain valuation compared to recent years.
This purchase confirmed again to me that Buffett is willing to invest wherever he sees upside value. And that’s regardless of whether it’s sweets or semiconductors.
While I’m not investing in Taiwanese or Chinese stocks because of geopolitical risk, I’ve still been buying a variety of shares recently. Whether that’s out-of-favour growth stocks such as ASML, or simple dividend shares like utility giant National Grid. Basically, wherever I see value and potential, regardless of sector or size.
Plus, I’ve been looking in corners of the market where I’ve not traditionally fished before.
REITs
Real estate investment trusts (REITs) allow me to passively reap the rewards of this profitable asset class without taking on landlord responsibilities. REITs sold off recently due to fears of rising interest rates, and this remains a risk to some extent. But I think that this fear-driven sell-off largely represents an opportunity for me to invest.
One REIT I’ve got on my watchlist is American Tower, which owns and operates wireless and broadcast communications infrastructure around the world. The stock is down 23% year to date. Yet I’m confident that steadily rising demand for mobile data should lead to decades of future growth (and dividends). The yield is 2.7%.
Another stock on my radar is Warehouse REIT. As the name suggests, this is a property group with a portfolio and investment strategy focused on UK warehouses. It acquires and leases urban warehousing space, predominantly to e-commerce enterprises. Its properties have an impressive 92.7% occupancy rate, as of today.
The stock is down 36% year to date, and now carries an enticing 5.8% yield. Investing in REITs such as this will boost my passive income, enabling me to have more money to put to work when fear sends share prices down again.
The market is continuing to offer up opportunities for patient, long-term investors. It’s on me to seize them while the fear lasts.
