No. of Recommendations: 6
I would suggest he is putting that famous aphorism into practice right now. The major indices are up double digits in 2023 but Berkshire has been a net seller of stocks, by something like $23 billion, if the reporting is accurate, contributing to the record cash pile.
Yes, I largely agree, and I too hope that this is the reasoning. If you look at Dataroma for purchases and sales, in Q3, Berkshire purchased shares worth a total of 0.17% of the US stock portfolio (worth $313b at the end of Q3) and sold shares worth a total of 1.89% of the portfolio. Looking at previous quarters, it was buys of 0.52% in Q2 with sales of 1.96%. For Q1, it was buys of 2.02% and sells of 2.75%, and for Q4 2022 it was buys of 0.04% and sells of 3.31%. For the 4 quarters, that makes stocks worth an average of 2.75% of the portfolio bought and stocks worth 9.91% sold, for a net sale of 7.16%. 7% of $300B is $21b, so your number sounds about right. Given that about 75% of the portfolio is in stocks that Buffett is unlikely to ever sell (I'm arbitrarily counting Apple, American Express, Coca Cola and Occidental in that group), he has sold a much bigger proportion of what one might call the 'active' portfolio.
It's true that, as a percentage of Berkshire's assets, the cash pile isn't really very much bigger than it has ever been ($12b in Berkshire share repurchases has helped keep it from increasing much), but still, it's in the right direction to support half of the aphorism, the "be fearful when others are greedy" half.
I'm not so sure that the Rule #1 and the 'no forecasting of macro events' rule get him off the hook for 2008 and 2020, though. If you like "be greedy when others are fearful", you actually have to buy when others really are fearful, and there's usually some good reason to be fearful. You can only be contrarian if you are making a sort of market forecast, the forecast that says that Mr Market's pessimism is overblown. In retrospect, 2008-2009 and early 2020 were great times to be greedy, not fearful along with the crowd, and if you can just quote Rule #1 every time the market is in turmoil, then the aphorism doesn't mean much. Or at least the "be greedy when others are fearful" half of it.
dt
