Warren Buffett has for decades been called the greatest investor of all time. And for good reason. Since gaining control of his company Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) in 1965, Buffett has managed an average rate of return of around 20% – more than double what the US stock market's S&P 500 index has returned over the same period.
Now in his late eighties, Buffett is still looked upon as a source of inspiration by most investors, and what he does with his company's money is widely reported and analysed – his nickname is the 'Oracle of Omaha' after all.
So with the US markets breaching new all-time highs in the last few days (with the ASX close on its heels), what can we learn from Buffett today about how we should be investing?
Well, according to a report in the Australian Financial Review (AFR), Buffett has indeed been investing over the last three months.
In US short-term Treasury bonds.
That's what large companies buy when they can't actually find investments that they want.
That's right, Buffett hasn't been investing at all over the September quarter, apart from buying back Berkshire's own stock (even with that, he still only bought about US $700 million worth).
And that's despite the fact that Berkshire is sitting on a US $128 billion pile of cash, according to the AFR report – up from US $122 billion in the prior quarter.
What is Buffett telling us?
Well, it tells us that Buffett can't see any decent opportunities at all in today's market. In his annual letter to shareholders earlier this year, Mr Buffett described stock prices as "sky-high", but also said that "we continue, nevertheless, to hope for an elephant-sized acquisition."
The vibe I get from both these comments and what Berkshire has been doing with its money is that Buffett is adopting a 'watch-and-wait' attitude whilst markets remain at these record-high levels. Maybe we should all consider following his example.
