BUFFETT’S REPORT CARD
Report card of Warrant Buffett’s Berkshire Hathaway lately after the May 15 SEC Filling
– Report in May states that BH sell off 84% stake in Goldman Sachs. Still owns 1.9M shares
– Sell US Bancorp and BNY Mellon
– Sell JPMorgan Chase & Co by 3%
– Fully exit Travelers and Philips 66
– Sell 0.7% of Amazon within 1Q2020
– Buy PNC Financial services group to 6%
– Admitted his mistakes in betting on airlines and sold all airline stocks
Facts
– BH loss USD50B in 1Q2020
– Sold USD6.5B of stocks in April and bought USD426M
– Cash pile increase to USD137B in 1Q report
PS: not every trade in WB’s Berkshire Hathaway Inc’s holdings are shared immediately. It can have several weeks delay before announcement.
WHAT BUFFETT SAID DURING ANNUAL SHAREHOLDER’S MEETING
Cannot evaluate the market forward, and talks about Great Depression
Refer to my earlier blog post.
Admitted mistakes in betting on airlines
“The world has changed for airlines,” saying the industry is “really hurt by a forced shutdown” due to the unforeseen pandemic.
WB admitted that his purchase of airlines stocks is wrong. “It turned out I was wrong,”
“I don’t know that three, four years from now people will fly as many passenger miles as they did last year,” Buffett said. “You’ve got too many planes.”
Optimism in America
“I remain convinced… nothing can basically stop America,”
“In the end, the answer is: Never bet against America.”
Banking system is not a problem but will be under stress if economic conditions worsened.
“I think overall the banking system is not going to be the problem”
“even strong banks can be under a lot of stress, and we’ll be very glad we’ve got the Federal Reserve system, standing behind them.”
SO WHY IS WARREN BUFFETT KEEPS SELLING?
In my opinion, WB is clearly unsure on the stock market future which he explicitly said that nobody knows what the stock market is going to do tomorrow.
In a situation like this, he is clearly weighing risk and reward and making the most obvious choice as below.
1) Keep more cash
2) Sell those stocks which you have made profits over the years but clearly think they are likely to feel stressful in the times ahead. E.g. the bank and insurance stocks!
3) Sell those stocks whose future is really bleak even if you have made losses. E.g. airlines stocks!
Questions?
So did you have sufficient cash now or already “fired all your bullets” ?
Are you still buying into bank stocks like DBS, UOB and OCBC which you think is good value now, just because they fall in stock price compared to last year?
Are you buying into Singapore Airlines (SIA) just because Singapore government assured that they will save SIA at all cost?
Even Ray Dalio sold his US stocks. He only increased buying on gld and china stocks. Long term us bonds too.
Ray is my favourite investor! 🙂 but the truth in the economy does not reflect the market in general. Hence earning money does not really requires the truth nowadays. So actually its not to say you should not buy now, because stock may rally and Dow may hit 30K, nobody knows and stock market is irrational.
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