Why is Buffett's wealth gaining as the market is shrinking?

Moomoo Learn wrote a column · Mar 15, 2022 19:33

- Most expensive stock: $500,000 per share

You might have noticed the news that Warren Buffett's $Berkshire Hathaway-A (BRK.A.US)$ shares hit $500,000 for the first time on Monday, March 14, 2022.

Berkshire's Class A shares are up 10% in 2022, outpacing the S&P 500, which is down 12%.

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This is quite tempting when the broader market experiences a sharp pullback. In part, it reflects the company's status as a defensive stock in a volatile market.

The market is shrinking, while Buffett's wealth is appreciating.

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Time is the criterion for testing master.

Berkshire bought an additional $27.1 million shares of $Occidental Petroleum (OXY.US)$ from last Wednesday through Friday, according to filings with the U.S. SEC on last Friday.

As we reported last week, Berkshire already added Occidental to its portfolio between March 2 and March 4. Berkshire now owns 118.3 million Occidental shares, equivalent to a 12.7% stake in the company. (Read more: Oil prices are rallying, and Buffett is buying.)

Reminder: Because Berkshire owns more than 10% of Occidental, it needs to report trading in this stock within two business days.

Occidental stock prices are up nearly 90% over the past 12 months as oil prices surge.

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Safe, defensive, diversified.

Growth technology stocks, which are crowded with investors, have taken the hardest hit amid worries of aggressive interest rate hikes and geo conflicts.

Value stocks have continued to outperform growth stocks this year, contributing to the steady growth of Buffett's wealth. Berkshire's current investments are widely distributed in banking, insurance, energy, technology, consumption and many other areas, and its large portfolio continues to provide robust cash flow.

Why is Buffett's wealth gaining as the market is shrinking?

Concerns for high-growth tech stocks are a boon for Buffett's investing style, which benefits his value-driven approach as the market moves toward cheaper and more defensive industries.

Learning from the master would be an efficient and safe way to beef up your investment skills.

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- Don't miss Buffett's golden rules of investing

A drop in price is an opportunity to increase a position. "Whether we're talking about socks or stocks, I like to buy quality items when prices drop."

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