Legendary US investor Warren Buffett
Legendary US investor Warren Buffett has proven to be a generally smart investor for several decades now, so his enthusiasm for shares in the depressed third quarter this year has to be taken note of.
His Berkshire Hathaway investment company invested US$23.9bn in the July – September period, the most in at least 15 years, and he broadened the portfolio beyond the usual consumer and financial-company holdings.
Among the new industries he has taken a shine to are drug stores, cable television, weapons manufacture, computer components and discount retailing.
Despite the volatility of markets, Buffett lives by the theory that, if you can find a good company at a reasonable price, then you should actively ignore day to day fluctuations in the markets, economic statistics and kneejerk media headlines.
As he said this week on his first trip to Japan (where he is likely to invest) he is looking for “businesses that will be around for many, many decades.”
Investors should check their portfolios to make sure they have that level of confidence
in their investments.
As it happens, his timing may be pretty good. Statistics out this week from the US show that economy is starting to recover in a number of areas, including consumer spending, business spending and housing. GDP growth is estimated to be running at a decent 3% – 4% annual rate in the current quarter.
Naturally, an improved economy is good for corporate earnings and share prices, so it appears Buffett may be in the money yet again.
Mere mortals like the rest of us could do well to follow suit.