Thank you, Warren Buffett!
Billionaire super-investor Warren Buffett will retire from day-to-day duties at Berkshire Hathaway at the end of the year. That will mark the end of an incredible six decades, during which time he led Berkshire to a $1trn valuation.
Naturally, the wisdom the Oracle of Omaha has shared over the decades will live on. And algorithms will probably be showing memes of his most-famous quotes on social media for many years to come!
My favourite Buffettism is, “Be fearful when others are greedy, and greedy when others are fearful”. This is something I put into practice in April when President Trump’s tariff bombshell sent the stock market into a tailspin.
The S&P 500 dropped 10.5% in just two days, one of its worst two-day plunges in history. And the FTSE 100 didn’t get off scot-free, as it plunged by double digits over that crazy week in April.
Moreover, that drop followed a period when the market had already pulled back, magnifying the peak-to-trough declines.
Some stocks in my portfolio fell much harder than 10% — a handful slumped by more than 20% in days. But rather than panic when others were suddenly very fearful, I became greedy. Like a hungry kid in a candy store!
Here are the three stocks that I loaded up on in April, and how they’ve performed since.
| Return (as of 28 June) | |
| Nvidia | 63% |
| Shopify | 52% |
| BlackRock World Mining Trust | 33% |
I also bought a Nasdaq 100 index tracker fund, and that’s up around 30%. Indeed, the Nasdaq 100 just hit a record high this week!
Buying the fear
Now, I should say that I had no idea that these shares would rebound so quickly.
In fact, I was prepared for them to fall further, given how fearful investors had become. Some analysts were predicting a massive stock market crash.
However, Buffett has long argued that these are precisely the best times to invest. And he’s right, of course. Thank you, Mr Buffett!
The other side of the coin
However, buying the fear is just one part of the equation. The other is knowing when others are being greedy.
Looking at the most bought shares at Hargreaves Lansdown earlier this week, The Smarter Web Company, Metals One, and Coinsilium Group were the top three. There appears to be a lot of speculation there!
Therefore, investors might want to look at solid FTSE 100 business that aren’t overvalued. One stock that springs to mind is Coca Cola HBC (LSE: CCH).
It’s up 39% year to date, but still trading at a reasonable 16.5 times forward earnings while offering a 2.3% dividend yield.
The company is a bottling partner for the Coca-Cola, distributing its top-notch portfolio of brands to 29 countries across Europe, Africa, and parts of Asia. It reaches a combined population of around 750m people!
What I like here is that no country represents more than 20% of sales volume. This balanced global footprint spans mature and higher-growth emerging markets.
Now, one potential risk here is an escalation in the Middle East conflicts. Already, Muslim consumers are boycotting US brands in some of the firm’s markets, including Egypt and Bosnia. That trend could worsen.
Longer term though, I remain bullish on this stock and reckon it’s worth a look. Rising incomes and urbanisation in emerging markets should continue driving robust demand for Coca-Cola’s branded beverages.
The post Thank you, Warren Buffett! appeared first on The Motley Fool UK.
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Ben McPoland has positions in BlackRock World Mining Trust Plc, Coca-Cola Hbc Ag, Nvidia, Rolls-Royce Plc, and Shopify. The Motley Fool UK has recommended Nvidia, Rolls-Royce Plc, Shopify, and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
