Warren Buffet buys ‘aggressively’ when US stocks dip, refrains from short-term bets: What should you do amid volatility? | Stock Market News

Wall Street today: US stocks crashed in the previous session due to a global selloff fueled by mounting recession fears among investors in the world’s largest economy. On Monday, more than $1.93 trillion was wiped out of the US stock market as the tech-heavy Nasdaq composite dropped over 1,000 points.

The turmoil began following the release of a disappointing July jobs report, which fueled concerns that the US Federal Reserve has moved too slowly to cut interest rates — a move meant to alleviate some pressure on the economy. 

The bloodbath on Wall Street led by the global stock market crash left investors worried about their holdings and trading strategy to apply amid the current volatility. Ace investor Warren Buffett recently spoke to CNBC and revealed some of his personal trading strategies amid a market crash. According to the Oracle of Omaha, ‘When the stocks are crashing, it’s always good news’.

Also Read: US Fed holds key rates elevated at two-decade high, Powell nods to possible September cut; 5 major takeaways

Warren Buffet’s trading strategy in a market crash

‘’If you’re a long-term investor, it doesn’t matter. In fact, you’d be wise to ignore short-term ups and downs in the stock market altogether — at least”, said Buffet. The Berkshire Hathaway owner refrains from short-term bets and says he ‘’can’t predict market movement or what stocks will do in the short run.”

However, Buffet seems sure that stocks will go up in the long term with the pace of America’s businesses over a long period of time. On whether to buy or sell in a market crash, Buffer said that he is ‘’almost always” a net buyer of stocks. ‘’We’re a more aggressive buyer when stocks are going down, but it’s hard to think of very many months when we haven’t been a net buyer of stocks,” he added.

He explained that stocks will go up in the next 10, 20, and 30 years and that ‘’the only person who can cause you to have a bad stock result is yourself.” Warren Buffett often said that it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

This effectively means investment in a company with a formidable competitive edge —bought at a fair price — will be more fruitful in the long run vis-à-vis a company that has fewer chances of excelling in the long run. For instance, Buffett has invested in Apple, American Express and Coca-Cola, among others.

Berkshire Hathaway recently sold half its stake in tech giant Apple and increased its cash holdings to nearly $260 billion. Berkshire didn’t give an exact count of its Apple shares, but it estimated the investment was worth $84.2 billion at the end of the second quarter even though shares soared over the summer as high as $237.23. At the end of the first quarter, Berkshire’s Apple stake was worth $135.4 billion.

Berkshire Hathaway Inc announced its first quarter results on May 4, reporting a record quarterly profit, boosted by a significant increase in income from insurance underwriting. The first-quarter operating profit rose 39 per cent to $11.22 billion, or about $7,807 per Class A share, from $8.07 billion a year earlier.

The multinational conglomerate’s income fell to $12.7 billion in the quarter-under-review, or $8,838 per share, from $35.5 billion, when Berkshire had large unrealized gains from its stocks. An accounting rule requires Berkshire to report the unrealized gains and losses with the net results, and Buffett urges investors to ignore the resulting volatility. 

Berkshire also repurchased $2.6 billion of its own stock in the first quarter, and a small amount in the first three weeks of April. The firm’s hoard increased to $189 billion at the end of the first quarter, topping the record it set at year-end.

Also Read: Warren Buffet’s Berkshire Hathaway Q1 operating profit rises 39% to $11.22 billion, net income drops 64% YoY

Wall Street today

On Tuesday, Wall Street bounced back and rose over one percent as investors looked for bargains after a global stock selloff and dovish comments from US Federal Reserve officials lifted market sentiment. All of the S&P 500’s sub-indexes advanced, led by the real estate sector, which is up 1.8 per cent so far today.

Among megacap and growth stocks, Nvidia made a sharp recovery with a 4.4 per cent gain after posting similar losses on Monday. Uber stock jumped 7.7 per cent after the company reported better than expected second quarter revenue. In the bond market, Treasury 10-year yields advanced 5 basis points to 3.84 per cent. The S&P 500 and the Nasdaq posted losses of at least three per cent each in the previous session after the unwinding of sharp positions in carry trades that fund high-yielding assets.