Interesting analysis by Andrew Ross Sorkin in The New York Times today.
Some might think this is obvious but most are just talking about airlines. Perhaps he is signaling some real concern but is trying not to spook the markets and be positive.
Every year for the last decade, I’ve sat onstage at this meeting in Omaha with Mr. Buffett and his best friend, Charlie Munger, as one of several journalists asking him questions sent in by the public. His positivity, even during difficult economic moments, always radiated with a clear sense of certainty. After all, he is known as the Oracle of Omaha.
That’s why it was unsettling to hear him repeatedly say “I don’t know.” He was careful to say the markets would improve in the long term — though his time frame for certainty was decades, not months or not even necessarily years from now. About the current climate, he said, “You can bet on America, but you kind of have to be careful about how you bet.” He added “simply because markets can do anything.”
At a time when the stock market has been buoyed by politicians pushing to reopen America and hopeful investors often willing to overlook the immediate economic carnage, Mr. Buffett sounded a note of realism about the challenges ahead.
He talked about the possibility of a second wave of coronavirus infections. He acknowledged that the world might profoundly change for years to come. And he spent a notable portion of the meeting detailing the economy’s performance since 1789, with a particular focus on the years between 1929 and 1951, a period in which the stock market took 22 years to get back to its highs.
More than his words, he spoke with his wallet. He usually relishes a down stock market to take advantage of lower prices. Not this time. He hadn’t made any purchases recently; he didn’t buy up stocks when they had fallen last month during what felt like a mini-panic: “We have not done anything, because we don’t see anything that attractive to do.”
Juxtapose that with his actions in the midst of the financial crisis of 2008. Back then, he wrote an op-ed in The New York Times a month after Lehman Brothers filed for bankruptcy: “In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary. So … I’ve been buying American stocks.”
This time, he is husbanding his capital. “Our position will be to stay a Fort Knox,” he said.
In other words, he is hoping to protect the company if things get worse, and he is clearly worried enough that it might.
He said the $137 billion he had on hand “isn’t all that huge when you think about worst-case possibilities.”
Let that seep in.