Warren Buffett is waiting 20 years to see this result

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Dear Reader,

Warren Buffett's Berkshire Hathaway loaded up on stocks as stock prices fell earlier this year.

At the Berkshire Hathaway Annual Shareholder meeting, Buffett revealed that the company bought $51.1 billion worth of stocks during the first quarter.

"We spent $40 billion in a hurry, in three weeks," Buffett said. "Now we're back, somewhat, in our more lethargic mood."

The first quarter saw the S&P 500 plummet by as much as 13.7%, hitting a low of 4,114 on February 24, before recovering a bit to end the quarter down 4.9%.

Berkshire's trading activity seems to echo one of Buffett's most famous quotes:

"​​Be fearful when others are greedy, and be greedy when others are fearful."

But don't assume that this buying is Buffett signaling to the world he believes the stock market has bottomed.

Buffett's reputation as a value-oriented investor with a track record of market-beating returns may have some folks thinking the "Oracle of Omaha" is a successful market timer.

Indeed, one of his most prominent calls to buy stocks occurred during some of the darkest hours of the financial crisis.

However, he made clear at the meeting that he is no market timer.

"We haven't the faintest idea what the stock market is gonna do when it opens on Monday — we never have," Buffett said.

Buffett reiterated that the long-term prospects inform his trades of the businesses he's buying, not his short-term expectations for the market or the economy.

"I don't think we've ever made a decision where either one of us has either said or been thinking: 'We should buy or sell based on what the market is going to do,'" Buffett said.

These comments come as market volatility remains very high.

Fortunately for investors like Buffett, what happens in the weeks following a buy doesn't make or break a trade.

"Over the next 20 years, I would expect [Berkshire's stock portfolio] to have more capital gains than not," Buffett quipped.

It's worth noting that since 1926, there's never been a 20-year stretch during which the stock market didn't generate a positive return.

"I'll report to you in 20 years whether it's happened or not."


Andrew Graham

Editor, Silver Ridge Market Report

P.S. As of this writing, the markets show 30-day performance of:

  • Dow Jones is down 4.91%
  • S&P 500 is down 8.75%
  • Russell 2000 is down 9.03%
  • NASDAQ is down 12.99%

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