And at last I felt to write down my “no surprise” feelings about what happened in March at Berkshire, and about what has been said at the Sharholders meeting last May the 2nd.
“We didn’t find anything attractive”. In his own words continues: “That could change very quickly or it may not change”. It’s the usual good old Mr. B coyly giving all the answers giving you no answer at all, but telling you the truth. So we can only rely upon what has been done. Berkshire spent roughly 4 billions in purchasing stocks in march, 1.7 of which on repurchasing stocks. It means he found enough attractive the price of our own stocks, so to be re-purchased for treasury. Good news for all the shareholders. It didn’t happen again in April when repurchasing of stocks was zero. In April prices didtn’ make sense again for any moves. And march 23rd with the Dow at its low was not enough for a BIG move for Buffett. Why?
I think its a lesson that he said multiple times he learned from 2008 and nine. He was buying aggressively from september to october (I wrote about this in a previous article here) and recognised later it was too soon, too fast. “My timing was actually terrible” he said again last May the 2nd. The situation now is even more peculiar : a pandemic is different from a financial crash. So since Boredom and Patience are not a problem for the Oracle, at the end of the day, his reasoning makes sense. It’s like he said to himself: this thing is going to last. I’d like to wait and see and still be a huge Fort Knox of cash always ready for everything. Is this a move that will pay off more than any other in the future? Or some big opportunity in the trouble of last march is gone with the wind and never going to come back? Nobody knows. But we know one thing for sure:
On one side of the equation there’s normal people that like the Buffett of many decades ago can (partially or totally)subscribe the following lines from Ben Graham:
“The investor who buys securities when the market price looks cheap on the basis of the company statements, and sell them when they look high on this same basis, probably will not make spectacular profits. But on the other hand, he will probably avoid equally spectacular and more frequent losses. He should have a better than average chance of obtaining satisafactory results. And this is the chief objective of intelligent investing”.
(B.Graham “The interpretation of financial statements” 1937 ed.pag.78)
Now, Buffett since decades from Graham achieves spectacular profits and became a ferocious learning machine since ever. This learning machine doesn’t go for satisfactory results. If he has to swing for average, he wouldn’t swing at all and wait. We swing, he doesn’t. Can he be wrong ? Of course he can. With Airlines again he was wrong. And not for the first time. But can he be right? Probabilities say yes, a lot. He doesn’t manage anymore small amounts of money, for which decisions can be easier to make. He didn’t even remember when asked by Becky Quick who and what Berkshire bought with just 462 million. Because they are peanuts for Berkshire. At this point It is so wonderful to be here and see what happens. Over the long run both the intelligent investor and the Man in Omaha will do fine and probably more than fine, like America will do. So the question is : would you bet against Buffett? Would you bet you can do better than he does under the same circumstances, with the same huge amount of money? I wouldn’t.