Matt C
Cybersecurity Engineer, Bitcoin Background Since 2014
Berkshire Hathaway offers no edge over simply owning the S&P 500. Its supposed defensiveness does not hold up, since both fell over 50% in the financial crisis and over 30% in 2020. Investors worried about a recession can keep some cash themselves rather than rely on Berkshire's cash pile. x.com x.comÂ
SPY's current pullback looks brief because whale accumulation remains above the level associated with mid-term trend continuation. The reading is 87.74%; it fell below 80% before both recent major crashes. Barring a black-swan event or major unexpected fundamental shift, this decline looks closer to earlier minor corrections. The stock market still has significant upside, and fear-driven discounts remain opportunities. x.com x.comÂ
Berkshire Hathaway is built for long-term survival rather than maximum returns, earning a Risk Shield rating of 95/100 that puts it in the top 5% of stocks globally. Growth is average and quality only slightly above average, but the balance sheet holds a record $397 billion of cash, 31% of total assets, with negative net debt, low beta and low volatility. x.comÂ
Berkshire Hathaway is effectively a lower-beta version of the S&P 500 unless Greg Abel reinvents the wheel, and that makes it a better buy than the index during selloffs like this one. Its 20-year total return exactly matched the S&P 500's at 694.6%, with milder drawdowns but milder upside in tech-led rallies. Much of its roughly $400B cash pile is insurance float, so less is available for buying stocks, and outside tech nothing big enough is both deep value and growth to be the next Apple. … Show more
Geopolitical risk is mostly a buying opportunity for US large-cap equities, because fear overshoots and then relief overshoots. The market priced in war for two months, then the S&P 500 rose 3.6% in a week once a US-Iran ceasefire landed. Retail investors who sell into fear miss the relief; the position held through the noise is the one that pays. x.com x.comÂ
The S&P 500 rally likely has a few more days worth staying exposed to, because SPY's cumulative advance/decline line is still below its all-time high. The A/D line turned up at the end of March and its trend remains positive. The Fear & Greed Index keeps climbing, though, so it may be time to start dialing back exposure. x.comÂ
Berkshire Hathaway is a better holding than the S&P 500 right now, offering both higher returns and a higher margin of safety. x.com x.comÂ
US large-cap equities are at the point in the cycle where a violent, fast snapback rally is due, with the S&P 500 well off its highs and Nvidia and Meta down sharply. The best days almost always follow the worst, and missing the 10 best days cuts long-term returns in half. Selling covered calls now, effectively a bet against the stock, locks investors out of the recovery for a few hundred dollars of premium. x.comÂ
Investors who can't handle a 3% drop the day after buying should own only US large-cap stocks and long-term Treasuries. x.comÂ
Berkshire Hathaway is an attractive hedge against speculative holdings because its fortress balance sheet gives it optionality either way. If markets do well, it cruises with existing assets and collects yield on its cash. If markets drop, it can buy the dip like no other. x.com x.com x.com x.comÂ
Strong corporate earnings make weekend crash panic a contrarian buying opportunity in US large-cap equities. Most individual stocks have already gone through bear markets despite the S&P 500 nearing record highs; weekend social-media panic rarely leads to a genuine economic downturn and instead offers long-term investors an attractive entry point. x.comÂ
