Warren Buffett, Berkshire Hathaway’s (BRK-B) chair, is known for his witticisms. One of his famous quotes is “Be fearful when others are greedy and greedy when others are fearful.”
The legendary investor is known for value and contra-investing. Over the last couple of years, Buffett has been blamed for holding too much cash. Berkshire Hathaway still held more than a $100 billion in cash at the end of the third quarter despite increasing its investment in Apple (AAPL).
As Buffett himself has admitted, there haven’t been many market opportunities at reasonable prices of late. In 2015, while acquiring aerospace component maker (BA) Precision Castparts, Buffett didn’t mince words in calling the deal expensive.
Time to get greedy
With the crash in the equity markets, Buffett might find more opportunities to deploy Berkshire Hathaway’s excess cash. He’s also looked at new opportunities and markets. Earlier this year, Berkshire bought a small stake in Indian startup Paytm. It was also rumored to have bought a stake in another Indian bank. Banks form a healthy portion of Berkshire’s portfolio. In the third quarter, the company added more shares of Bank of America (BAC) while trimming its stake in Wells Fargo (WFC).
As economic growth slows and stock prices become more reasonably priced, the legendary investor could get a little greedy as the markets get more fearful.
In the next and final article, we’ll look at aluminum production and prices.