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Investing Lessons from Warren Buffett: Key Insights

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Warren Buffett

Berkshire Hathaway (BRK-B) chairman Warren Buffett is known for his value investments. Buffett has outperformed the S&P 500 (SPY) by a wide margin over the last five decades. Berkshire Hathaway returned a compound annual growth rate of 20.5% between 1965 and 2018—compared to the S&P 500’s (SPY) return of 9.7%. The calculations are based on data from Berkshire Hathaway’s annual report. SPY’s returns include the dividends. Berkshire Hathaway also outperformed the markets last year.

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Criticism

In February, there were two regulatory filings from Berkshire Hathaway. The fourth-quarter 13F released on February 14 showed that Berkshire Hathaway sold some Apple (AAPL) shares and exited Oracle (ORCL). However, Berkshire Hathaway added Suncor and Red Hat (RHT) (IBM) to its portfolio. Buffett doesn’t really have a flair for technology stocks (AMZN) (NFLX). Berkshire Hathaway’s portfolio is overweight with banking and consumer stocks (KHC) (KO).

Buffett has received some criticism for not deploying Berkshire Hathaway’s cash in the fourth quarter. Jim Cramer wants Buffett to be more active with companies in the portfolio.

Berkshire Hathaway

In Berkshire Hathaway’s annual report, Buffett seemed to take shots at President Trump. Read Warren Buffett and the Problem with Elephants for more analysis of Buffett’s annual letter. In an interview with CNBC last month, Buffett talked about an array of topics including why he didn’t go overboard buying stocks in the fourth quarter. He also shared his views on some portfolio companies and the economy.

Next, we’ll discuss why Buffett didn’t aggressively buy stocks in the fourth quarter.

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