Why is Berkshire doing something now that it failed to do in 2008-2009: buying equities? I looked at the cash flow statements for 2008 and 2009 and they had a net deployment of cash (equities purchased less equities sold) of $2 billion. I know that it felt like the world was coming to an end in 2009, but Fort Knox should be buying when others are terrified. Berkshire did purchase $21 billion of preferred and debt that contained some equity kickers, but those additions were not necessarily designed to last for a long time - not like common stocks.
Clearly, I donât know, but I wonder if Berkshire is determined to not make that mistake again and is buying early this time. Or, are the people at Berkshire much smarter than me (which, of course, they are) and see current prices on some select securities worthy of purchase today.
As I write this the Dow is down 1,160 points and I see red on almost every stock I list on my financial page. This market knows no mercy. Target had a miss and was written down 25% today. This is not some new tech company selling for 20 times 2025 sales, but a well-established, formidable company. Thus is the mood of the market.
I am not suggesting that Berkshire or anyone try to time the market. But as I had stated before, one can value the market, and the people at Berkshire should be better at that than almost anyone else. Valuing the market means to look at the current environment. We still have a richly valued market even with war, inflation, a slowing economy, supply chain disruptions and crypto currencies selling at more than 0.00 per share.
I was not asked, nor do I know, but I still believe that this market has plenty of room on the downside. So, why is Berkshire buying equities now with all that I listed above when in the dreadful throes of 2009 it shunned common stocks?