Title: "Buffett's Brilliant Moves Again! Berkshire Hathaway's Cash Surpasses Ethereum's Market Value, Reviewing His 20-Year Record of Brilliant Market Timing"
Author: James, BlockTempo
Warren Buffett's investment company, Berkshire Hathaway, released its second-quarter financial report for 2024 last Saturday, showing a nearly 50% reduction in Apple holdings and a surge in cash position to $276.9 billion, reaching a historic high.
At that time, analysts believed that Buffett's large-scale sale of Apple shares was likely due to his pessimism about the stock market and economic prospects, hence choosing to hold a large amount of cash. With the recent stock market and Asian stock market crashes in the past few days, the community once again admires Buffett's sharpness in successfully timing the market.
Interestingly, Berkshire's cash holdings surpassed the market value of Ethereum when Ethereum briefly fell below $2,100 this morning. This is only the cash that the company can currently use, once again demonstrating its strong capital strength.
Reviewing Buffett's brilliant market timing over the past 20 years
Buffett is often referred to as the master of market timing. The following will review the brilliant market timing history of the stock god Buffett over the past 20 years.
1999 Dot-com Bubble: Refusing to touch industries he doesn't understand
In 1999, the dot-com bubble reached its peak, but Buffett adhered to the principle of "not making money beyond his own capabilities" and refused to invest in unfamiliar tech stocks. Despite being questioned, he insisted on not participating in "games where others have an advantage over me" and believed that the market value of U.S. stocks at the time had significantly exceeded economic growth. He also believed that the performance of the Dow Jones Industrial Average in the next 17 years would not be much better than that from 1964 to 1981, unless the market declined.
In 1999, while the S&P 500 index rose by 21% and the Nasdaq index surged by 66%, Berkshire Hathaway's market value fell by nearly 20%, marking its second worst performance since 1990. At the end of that year, Buffett even appeared on the cover of Barron's with an article titled "Warren, what's going on?" which stated, "After more than 30 years of invincible investment success, Buffett may have lost his magic."
However, by March 2000, the dot-com bubble finally began to burst and completely disappeared by 2001, and Buffett successfully timed the market.
Comparison of Berkshire Hathaway's performance with the Nasdaq index during the dot-com bubble.
2008 Financial Crisis: While others are fearful, I am greedy
The global financial crisis broke out in 2008, and the Dow Jones Industrial Average fell by 52% from its peak to its lowest point. Both tech stocks and traditional stocks plummeted across the board. However, amidst a market full of pessimism, Buffett published "Buy American. I AM." in The New York Times in October 2008, stating the classic quote, "Be fearful when others are greedy, and be greedy when others are fearful."
From September to October 2008, Buffett began bottom fishing, buying a large amount of shares in Constellation Energy, Japanese car manufacturer Tungaloy, Goldman Sachs, BYD, and General Electric. Berkshire Hathaway also acquired U.S. Bancorp for $15.1 billion.
After bottom fishing, Buffett was also stuck for a while. The price of Goldman Sachs stock dropped from over $125 to $53, and General Electric dropped from $22.15 to $14.03. However, Buffett bought preferred stocks with a fixed annual return of 10% for each company, which would yield substantial profits every year unless the companies went bankrupt.
Five months after the publication of "Buy American. I AM.," the U.S. stock market began to rebound from the bottom, ushering in a bull market that lasted for 10 years. During the financial crisis, Buffett and Berkshire Hathaway once again saw a substantial increase in assets, earning over $10 billion in returns.
2020 Pandemic: Cash is king, waiting for the right opportunity
In 2020, the COVID-19 pandemic broke out, causing a global stock market crash. Berkshire Hathaway held a large amount of cash and waited for the right opportunity. After the pandemic, it began to invest heavily in the Japanese stock market. Since 2020, Buffett has invested 1.6 trillion yen in the five major trading companies, which has appreciated to 2.9 trillion yen by the end of last year, yielding a profit of $8 billion.
Conclusion
It should be noted that Buffett's actions are not always perfect in predicting market tops, and he sometimes misses investment opportunities. However, Buffett's history of market timing provides valuable experience for investors. Although Buffett has not explicitly stated that he has timed the market, his high cash reserves demonstrate his cautious attitude in the face of market uncertainty.
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