Has Warren Buffett Lost His Touch?

By | June 17, 2020

Warren Buffett is #4 on Forbes Richest People In The World (CBS News). Period. End of Story. He is worth $67.5 billion all by himself, separate from his conglomerate Berkshire Hathaway.

Much of what we talk about here has to do with what Warren Buffett and others have been able to do consistently over decades. Warren Buffett may be, or has been, a genius, but what he has done doesn’t require tons of brains. Still, very few people have matched his success.

Now some of his recent moves confound me. Like much of it seems un-Buffett-esque. Let’s take a look at a few:

Heavy On Cash For Years

Berkshire Hathaway has had too much cash for too long. Buffett says that there has been a long-term dry spell of opportunities. And he’s not going to just spend cash just to spend cash. But wait… there was a downturn in the market. A big one.

What does Buffett do? He sits on his hands mostly. And he sells some stock. But he could have loaded up on shares at a bargain.

His excuse? The Covid-19 (Coronavirus) has created uncertainty and risk. Best to stay in cash. And by the way, nobody was seeking a deal from Berkshire Hathaway. This makes sense, but come on, not one company is a bargain and insulated from the virus (in March)?

He Sold Airline Stocks

Warren Buffett said he sold the entire Berkshire holding in all airline stocks during the March downturn. Excuse me, but if the airlines were good companies to hold, aren’t they still? If they aren’t, were they to begin with?

The Deal With Occidental Petroleum

Ok, you are going to invest $10 billion in an oil company. When oil prices are sinking… when electric cars are taking off… when a deadly virus is a real possiblity? Well, this was back in April 2019, but even then, I thought this was a little out there. Has Berkshire even collected on their special dividend or did they just collect more (potentially) worthless stock?

Why None Of This Proves Anything

Warren Buffett has been known to create silk purses out of sow’s ears for a long time. Borrowing a Nebraska saying. If he’s wrong, he’s still right.

And by the way, he’s 90 this year. He has generally picked old, boring, reliable companies with a competitive advantage. Rarely does he pick tech. He works with far too much money now to pick young companies. The S&P doesn’t produce too many double digit growers.

That doesn’t mean that us youngsters can’t do better. And it doesn’t mean that we can’t do worse either.

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