Berkshire Hathaway (ticker: BRK.A, BRK.B) CEO and legendary investor Warren Buffett has always been generous in sharing his time and his investing philosophy. In a pair of recent interviews with CNBC, Buffett discussed a range of important market topics. For decades, Buffett’s long-term value investing approach has consistently outperformed the S&P 500. Even during the past five years, when many value stocks and investors have lagged the market, Berkshire’s 88.5 percent overall gain has outshined the 72.4 percent gain of the S&P 500. Here are seven things investors have learned from Buffett lately.
Stocks are expensive.
When Buffett was asked if U.S. stocks are expensive, Buffett said frankly that American stocks are “definitely” pricey at the moment. Buffett said there’s simply no reliable way of predicting whether stock prices will go up or down over the next week or year, but stocks with high returns on capital will always eventually outperform bonds returning just 3 percent annually. “If you had your choice between buying and holding a 30-year bond for 30 years or holding a basket of American stocks, there’s just no question you’re going to do better owning stocks,” Buffett says.
Berkshire buybacks are not a guarantee.
Berkshire currently has more than $100 billion in cash on its balance sheet. In the past, Buffett has said that he would only buy back Berkshire Hathaway stock if the share price was at or below 120 percent of book value. Buffett said he uses intrinsic book value as a gauge rather than book value, and Berkshire has been buying back a limited number of Berkshire shares as of late. “We need a big enough discount, so we’re buying it at what we know is a price where the continuing shareholders are going to be better off,” Buffett says.
Buffett still loves Apple.
Buffett’s most aggressive investment in recent years has been a $56 billion stake in Apple (AAPL), which is now Berkshire’s largest holding. Buffett owns more than 5 percent of Apple, but he’s still buying more. When asked if he’s been adding to his Apple stake since the end of the second quarter, Buffet said he’s been selectively adding to his Apple holdings. “I bought just a little bit,” he said. “I like to buy them cheaper.” Since Berkshire first began buying AAPL stock in 2016 at around $100, the stock is up about 129 percent.
He’s maxed out on airlines.
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