Warren Buffett is buying....should you be too?

May 2022

The recent stock market fall has been bad news for most investors. But some smart investors are taking advantage. 

Warren Buffett is one of those. He is using this correction as an opportunity to increase his spending on stocks, buying tens of billions of dollars the past couple of months after ending 2021 with a near-record pile of cash.

One company he increased his position in was Apple, whose share price has fallen nearly 20% in the first few months of 2022. 

Mr Buffett has long advised that investors “be greedy when others are fearful.” This means buy when the market is low, and sell when the market is high.

That philosophy was likely difficult to put into practice for much of the past two years, as a lot of investors’ largely seemed anything but fearful. Now that the market has corrected, Buffett is in a prime position to add to his already mammoth stock portfolio. 

The last time the stock market fell like this, in March 2020, Buffett was criticized for not doing anything. However, the environment back then was a lot more uncertain and there was a lot more unknowns. This time around, it's different. The factors impacting global markets are cyclical - we have been here before, we will recover like before. 

All this panic, has created some bargain prices for global companies. So far, in 2022, Netflix is 70% cheaper, Meta (Facebook) 40% cheaper, Amazon 30% cheaper....the list goes on. 

Buffett ended last year with a mountain of cash on its hands — not necessarily out of a desire to build up its war chest, but because it had been impossible to find companies that seemed worth investing in for the long term. Until now. 

So when Buffett is buying....should you be too?