Warren Buffett. His Investment Style. And Crises.

Dear Reader,


The coronavirus crisis shock is in full swing globally. The Dow Jones Industrial Average recorded its largest loss in 30 years yesterday.

Warren Buffett is frequently hailed as one of the greatest investors of all time. How does Buffett's investment philosophy square to the current market environment?

Warren Buffett in his investments is basically underwriting the American and by default the global economy. His Berkshire Hathaway Inc. conglomerate's main business is insurance, which basically means underwriting the economy. His other large business segment is manufacturing and transportation which also is a way of taking risk off from the economy or riding on the economy's health.

More than 50% of Berkshire Hathaway's stock investments are in banks and financials - until recently amounting to 100 billion USD. Banks are also a leveraged play on the economy.

So if a catastrophe really hits the USA and the global economy, Warren Buffett could get wiped out and his fund(Berkshire Hathaway) could go bankrupt.

What is more, Warren Buffett's cash holdings are in short-term Treasury bills. And by the latest information the US Treasury market is close to freezing. If the US Treasury market really freezes, Buffett will be able to only cash out his holdings with a large discount, which is an euphemism for a large loss.

But yes. If the American and global economy recovers well after this shock the ones with cash to spare like Warren Buffett would have one of the most lucrative buying opportunity in history.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich