Warren Buffett – chair and CEO of Berkshire Hathaway Inc. (NYSE: BRK.A)(NYSE: BRK.B) – is well-known for being one of, if not the, best investors in the world. As such, his investing habits are closely scrutinised. Even so, there’s only one real way of knowing Buffett’s moves. And that’s through the US 13F filings. These are quarterly notices that tell investors exactly what Berkshire has been doing with its money. The only problem is that they come out over 3 months, and we only get to know what Buffett has done after he’s done it.
For instance, Buffett’s last 13F filing came out in February. But that covered the 3 months to 31 December 2020. We probably won’t get to see what Buffett has been doing in the 3 months to 31 March until next month. In the 3 months to December last year, Buffett did more selling than buying. So what would he think of the market today?
Well, one of Buffett’s most famous and memorable quotes is “be greedy when others are fearful, and be fearful when others are greedy”.
Right now, the S&P/ASX 200 Index (ASX: XJO) is at a 14-month high, despite today’s pullback. Yesterday, we saw the ASX 200 reach the 7,000 point level for the first time since the coronavirus hit.
Over in Buffett’s native United States, the flagship S&P 500 Index (INDEXSP: .INX) is sitting at all-time highs (not post-COVID highs), having recently crossed 4,000 points for the first time in history.
A Buffett of greed?
What’s more, there is real evidence that ‘fear’ is at the lowest levels we have seen for months. Over in the States, market volatility (a proxy for fear) is measured on an index known as the Vix. The Vix is currently at its lowest level since mid-February 2020 after some recent small spikes probably caused by the Suez Canal blockage and rising bond yields. That tells us that investors are certainly not fearful right now. So are they greedy? Should we be fearful instead, like Buffett preaches?
Well, that’s a harder question to answer. It’s possible the markets are treading a path between these two emotions right now. But shares are being pushed to record highs. One could easily make the case that this indicates a greedy market. Judging by the February 13F filing, Buffett is trimming positions here and there, but otherwise doing a whole lot of not much. There are certainly worse investors to take a cue from.
Where to invest $1,000 right now
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Sebastian Bowen has no position in any of the stocks mentioned. The Fintech Zoom Australia’s parent company Fintech Zoom Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: short June 2021 $240 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and long January 2023 $200 calls on Berkshire Hathaway (B shares). The Fintech Zoom Australia has recommended Berkshire Hathaway (B shares). The Fintech Zoom has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.