Grub’s Up

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What’s going on?

Warren Buffett’s Berkshire Hathaway announced over the weekend that it bought a smorgasbord of stocks last quarter – the most since 2008.

What does this mean?

Berkshire has been selling off stocks for the last two years, arguing that US companies are so overvalued that returns from any new investments would be few and far between. The conglomerate was so stock averse, in fact, that its pile of idle cash hit the princely sum of $147 billion by the end of 2021. But that was before war, a Chinese slowdown, and out-of-control inflation brought some stocks down to more reasonable prices.

That shift encouraged Berkshire to buy into insurer Alleghany and PC maker HP in March and April respectively. And now, it’s revealed that it also upped its stake in oil giant Chevron by over $20 billion last quarter, while at the same time becoming gaming company Activision Blizzard’s biggest shareholder. All in all, it plowed over $51 billion into stocks last quarter, reducing Berkshire’s cash pile to its smallest since 2018.

Why should I care?

Zooming in: Buffett chooses oil.

Between its stakes in Chevron and Occidental Petroleum, Berkshire now has more than $40 billion invested in the oil industry. That probably has something to do with the booming profits energy companies are making from sky-high oil prices, as well as the potential for them to climb even higher if the European Union ends up banning Russian imports altogether.

For you personally: How to beat inflation, Buffett-style.

If you’re worried about inflation, Buffett had a piece of advice: brush up on your professional skills, whatever they might be. Whether you’re a pro at writing, tracing, or training doves to spell rude words in the sky, Buffett said vendable skills “will remain in demand no matter what the dollar is worth”. And failing that, he said, invest in businesses whose products are in demand no matter what – citing his Coca-Cola holding as a prime example.

Originally Posted May 3, 2022 – Grub’s Up

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