Many people may not fully grasp the amount of information and depth of thought released in Buffett's last speech. Although his words are easy to understand, considering his investment operations and behaviors over the past 3-5 years reveals a wealth of information.
- At the shareholders' meeting, Buffett expressed strong confidence in the United States but had already liquidated most of his positions in advance and increased his holdings in Japan, making long-term investments there. This is an effective hedging strategy. Currently, the two most competitive regions globally are the United States and the Asia-Pacific (China, Japan), ranking among the top three economies. This represents two different types of corporate nature and investment thinking.
In terms of corporate governance models:
The American model emphasizes shareholder supremacy, efficiency, and rapid transformation, suitable for high-competition and high-volatility market environments (in times of peace, with ample liquidity).
The Japanese model focuses on stability, internal unity, and long-termism, better suited for slowly evolving, low-risk industrial environments (in turbulent times, with tightened liquidity).
In terms of financial management differences:
American model: Leans towards equity financing, emphasizes high ROE and capital return rates, adopts fair value accounting (GAAP/IFRS), and stresses transparency and investor orientation.
Japanese model: Tends towards debt financing, maintains low-cost stable funding sources, favors historical cost accounting, is conservative and prudent, and emphasizes long-term asset protection.
This is the core of Buffett's investment in Japan; the corporate management model in Japan aligns more with today's turbulent global financial environment. Although he personally flew to Japan to negotiate an increase in the dividend payout ratio, overall, it leans towards a more stable core.
The aforementioned events occurred in August 2020 when he announced through Berkshire Hathaway that he had quietly purchased about 5% stakes in the following five major Japanese trading companies, later increasing his holdings to 7.4% in 2023:
Mitsubishi Corporation
Mitsui & Co.
Itochu Corporation
Sumitomo Corporation
Marubeni Corporation
One cannot help but admire this foresight from five years ago, the vision and insight into the global landscape, and the fact that he bought Japanese stocks with low-interest Japanese bonds without spending a dime of his own money. Those who followed him five years ago, even buying properties in Tokyo, have reaped substantial profits.
At this shareholders' meeting, from the discussion of a $10 billion investment, it can be inferred that Buffett did not make significant moves in response to the recent tariff declines. Moreover, Buffett has consistently been optimistic about Apple. Why sell Apple at $250? Why not buy when it dropped to $170? Why hold $340 billion and not bottom-fish American stocks during the trade war crash? This indicates that the value proposition was not sufficient.
Finally, Buffett mentioned extremely valuable opportunities in the next five years. To be honest, I was startled by this statement. It suggests that the recent tariff decline is not a one-time opportunity. Therefore, we need to consider how to plan our funds for the long term. During our internal meeting today, we discussed whether to slow down the pace of bottom-fishing in U.S. stocks and cryptocurrencies. We should increase our gold positions; we have been consistently investing in gold, but our holdings are still not enough. Whether it’s the U.S. debt crisis, dollar depreciation, or the decline of U.S. stocks, as well as future interest rate cuts, gold is a good hedging tool.
If you can think at this level, perhaps there are many investment considerations and companies worth screening. Additionally, position management will become more rational and comprehensive. 🧐
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