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Here’s how Warren Buffett is investing in the current share market

Sebastian Bowen
Risky balance elephant tightrope

Warren Buffett has for decades been called the greatest investor of all time. And for good reason. Since gaining control of his company Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) in 1965, Buffett has managed an average rate of return of around 20% – more than double what the US stock market’s S&P 500 index has returned over the same period.

Now in his late eighties, Buffett is still looked upon as a source of inspiration by most investors, and what he does with his company’s money is widely reported and analysed – his nickname is the ‘Oracle of Omaha’ after all.

So with the US markets breaching new all-time highs in the last few days (with the ASX close on its heels), what can we learn from Buffett today about how we should be investing?

Well, according to a report in the Australian Financial Review (AFR), Buffett has indeed been investing over the last three months.

In US short-term Treasury bonds.

That’s what large companies buy when they can’t actually find investments that they want.

That’s right, Buffett hasn’t been investing at all over the September quarter, apart from buying back Berkshire’s own stock (even with that, he still only bought about US $700 million worth).  

And that’s despite the fact that Berkshire is sitting on a US $128 billion pile of cash, according to the AFR report – up from US $122 billion in the prior quarter.

What is Buffett telling us?

Well, it tells us that Buffett can’t see any decent opportunities at all in today’s market. In his annual letter to shareholders earlier this year, Mr Buffett described stock prices as “sky-high”, but also said that “we continue, nevertheless, to hope for an elephant-sized acquisition.”

The vibe I get from both these comments and what Berkshire has been doing with its money is that Buffett is adopting a ‘watch-and-wait’ attitude whilst markets remain at these record-high levels. Maybe we should all consider following his example.  

The post Here’s how Warren Buffett is investing in the current share market appeared first on Motley Fool Australia.

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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short January 2020 $220 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019