Last Saturday (3 May), Warren Buffett chaired his final Berkshire Hathaway (NYSE:BRK.B) annual meeting. He’s invested via the company for several decades. In the process, he built a formidable reputation as being one of the best investors ever. As part of the conference, he shared a few last gems which can help all of us in the market.
Detaching your emotions
April was a crazy month for stocks, with high volatilty driven by US tariff uncertainty. Buffett commented on the turmoil, saying that “people have emotions but you’ve got to check them at the door when you invest.”
This is a great piece of advice, as it can help avoid making irrational decision based in the heat of the moment. When the FTSE 100 was falling, there could have been the urge to panic sell. But a cool head and a long-term investing horizon could have avoided this, with the market now having moved back higher.
Buffett was tight-lipped about what he had been buying during April for Berkshire Hathaway. His top holding heading into the quarter was still Apple, which had a short-term fall based on the China tensions. It’ll be interesting to see if Buffett bought more during the dip, when the latest 13F filing gets released.
Focusing on the positives
It’s impossible to buy stocks that only go up. Over the course of several years of investing, any person is bound to have some poor stock picks. Buffett acknlowedged this during the conference, but flagged up that “it can often be a wonderful life even with some bad breaks.”
Berkshire Hathaway stock’s risen by 189% over five years and is up 26% over the past year. This reflects in part the appreciation in value of the shares held in the portfolio. Yet this doesn’t mean it only makes profits. For example, the business took a multi-billion paper loss as part of the investment with the Kraft Heinz merge back in 2015. Buffett also famously bought airline stocks in 2016 and 2017, which he excited in 2020 for a loss.
Despite this, Berkshire Hathaway’s continued to perform well, even though not all business decisions were perfect. By focusing on the positives and the outlook, it can prevent an investor from losing faith.
Buy when others are pessimistic
Finally, Buffett reminded everyone that “we will make our best deals when people are the most pessimistic.” This speaks to the fact that one of the best times to buy stocks is when everyone else is selling. This can result in the shares being undervalued, allowing a shrewd investor to buy and wait for the share price to return back to a fair value.
Over the past couple of years, Berkshire’s built a large cash pile. Buffett’s mentioned he has struggled to find good deals due to high stock valuations. In fact, the latest report shows it at $347.7bn. I imagine some of this was spent in April due to the market drop, which presented all of us with an opportunity to buy when others were pessimistic.
