Buffett shrugged off a compliment from one of his interlocutors about how good he is about the stock market. Buffett said he never knows what stocks or the economy will do in the short term.
“We never calculated anything,” Buffett said, adding that the success of the company’s long-term buy-and-hold investment strategy is “simple.”
Both Buffett and Berkshire Vice Chairman Charlie Munger have lamented that speculators seem to have taken over Wall Street. Munger described the atmosphere of a casino, while Buffett called the market a “gaming room”.
Anxiety about inflation, but praise for Powell
Buffett didn’t speak at length during the meeting about market volatility this year. But he said that inflation is a big problem that “deceives almost everyone.”
And he gave Federal Reserve Chairman Jerome Powell a big round of applause for his handling of the economic crisis caused by Covid-19, although some argue that the Fed’s low rates have helped fuel inflationary pressures.
Buffett said Powell was a “hero” for being aggressive and cutting rates quickly at the start of the pandemic instead of sitting back and “sucking his thumb.”
Buffett also hinted that Berkshire could take advantage of the selloff, saying the firm is “depending on” market behavior, creating opportunities for a mispriced company.
Activision’s share price is below the proposed takeover price. Buffett said he made the decision to buy more shares as an “arbitrage” bet that the deal would eventually go through.
The moves come just weeks after Buffett wrote in his annual letter to shareholders that he was having a hard time finding shares to buy at attractive prices. But after a Berkshire buying spree, its cash has fallen from about $147 billion at the end of 2021 to about $106 billion at the end of the first quarter.
Why does the heart change? Munger, in his typically blunt manner, said that he and Buffett “found some things we’d rather own Treasury bills.”