With cash in hand, reviewing the brilliant achievements of "escape top master" Buffett over the past 20 years

Original Title: “Buffett Shows Genius Moves Again! Berkshire's Cash Surpasses Ethereum's Market Value, Reviewing His 20-Year Glorious Top-Timing Record”

Original Author: James, BlockTempo

Warren Buffett's investment company Berkshire Hathaway released its Q2 2024 financial report last Saturday, showing that the company significantly reduced its Apple holdings by nearly 50%, while its cash position soared to $276.9 billion, setting a new historical high.

At that time, analysts believed that Buffett's large-scale sale of Apple shares was likely due to his pessimism about the stock market and economic outlook, leading him to choose to hold cash. Now, with the recent crashes in the U.S. and Asian stock markets, the community once again admires Buffett's keen ability to escape the market peak successfully.

Interestingly, this morning, as Ethereum briefly fell below $2,100, the cash held by Berkshire successfully surpassed Ethereum's market value. Moreover, this is just the cash that the company currently has available, once again highlighting its strong capital strength.

Reviewing Buffett's Top-Timing Record Over the Past 20 Years

Buffett is often referred to as a master of timing the market. Below, we will review the glorious history of stock god Buffett's top-timing over the past 20 years.

1999 Tech Bubble: Sticking to Industries He Doesn't Understand

In 1999, the internet bubble reached its peak, but Buffett adhered to the principle of "not earning money outside his capability," refusing to invest in unfamiliar tech stocks. Despite facing skepticism, he insisted on not participating in "games where others have an advantage over him," and believed that the market capitalization of U.S. stocks had significantly exceeded economic growth at that time. He thought the Dow Jones Industrial Average's performance over the next 17 years would not be much better than that from 1964 to 1981 unless the market declined.

The stock market in 1999 repeatedly challenged the stock god, as the S&P 500 index rose by 21% and the Nasdaq index surged by 66%, while Berkshire Hathaway's market value fell by nearly 20%, marking its second-worst performance since 1990. At the end of that year, Buffett appeared on the cover of Barron's, with an article titled "Warren, What's Going On?" stating that "after more than 30 years of invincible investment success, Buffett may have lost his magic."

However, by March 2000, the internet bubble finally began to burst, and by 2001 it had completely faded, allowing Buffett to successfully escape the peak.

Comparison of Berkshire Hathaway's performance with the Nasdaq index during the internet bubble.

2008 Financial Crisis: Be Fearful When Others Are Greedy

In 2008, the global financial crisis erupted, with the Dow Jones Industrial Average falling 52% from its peak to its lowest point, as both tech stocks and traditional industries plummeted. Amid the market's pessimism, Buffett published "Buy American. I AM." in The New York Times in October 2008, writing the classic quote "Be fearful when others are greedy, and greedy when others are fearful."

In September and October 2008, Buffett began to buy the dip, purchasing large amounts of shares in Constellation Energy, Japanese automaker Tungaloy, Goldman Sachs, BYD, General Electric, and others. Berkshire Hathaway's stake in Wells Fargo also saw a $15.1 billion acquisition of Wachovia.

After Buffett's buying spree, he faced some losses initially, as Goldman Sachs' stock price fell from over $125 to $53, and General Electric dropped from $22.15 to $14.03. However, Buffett bought preferred shares with a fixed annual return of 10%, ensuring substantial profits each year unless the company went bankrupt.

Five months after "Buy American. I AM." was published, the U.S. stock market began to rebound, leading to a 10-year bull market. Buffett and Berkshire Hathaway's assets soared again, with investments made during the financial crisis earning him over $10 billion in returns.

2020 Pandemic: Cash is King, Waiting for Opportunities

In 2020, the COVID-19 pandemic broke out, causing global stock markets to plummet. Berkshire Hathaway held a large amount of cash, waiting for opportunities. After the pandemic, Buffett began to invest heavily in the Japanese stock market, investing 1.6 trillion yen in five major trading companies since 2020. By the end of last year, this had appreciated to 2.9 trillion yen, yielding a profit of $8 billion.

Conclusion

However, it should be noted that Buffett's actions have not always perfectly predicted market tops, and he has sometimes missed investment opportunities. Nevertheless, Buffett's history of timing the market provides valuable lessons for investors. Although Buffett has not explicitly stated that the market has peaked, his substantial cash reserves indicate his cautious attitude amid market uncertainties.