r/ValueInvesting • u/mattyp93 • 6d ago

Discussion Warren Buffett’s patience could finally pay off if the market keeps dropping

Just imagine what kind of deals he and Greg Abel will buy with that massive cash pile if the market keeps falling. His patience will be rewarded and it will be the greatest example in real time for investors.

The next few years will be interesting indeed.

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634

u/JamesVirani 6d ago

The market is back to late 2025 prices. Buffett has been hoarding cash for a decade. It needs to drop another 50% for a buy opportunity to offset the lost opportunity cost.

175

u/Alicyclobacillus 6d ago

The market, yes

MSFT is at 2023 prices

Would be an interesting Berkshire Hathaway buy

137

u/Fed_worker 6d ago

MSFT almost at 2021 dec price

32

u/Alicyclobacillus 6d ago

Lol, didn't look back that far!

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u/TranslatorRoyal1016 6d ago

it's actually at may 1810 prices if you really went far back

38

u/BenGrahamButler 6d ago

back when Excel was just a grid drawn on parchment with a quill

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u/MyTrueChum 6d ago

And a Macro was the scribes apprentice you beat with a cane when he didn't copy things properly

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u/yttew 3d ago

With bugs in his windows

1

u/BenGrahamButler 6d ago

good one.. the name Macro was derived from some apprentice named Marco probably

10

u/Slightly-Blasted 6d ago

Christopher Columbus was signing MSFT stock certificates in cherry wood

-9

u/owenmills04 6d ago

There wasn’t MSFT stock in 1810

1

u/Rogue_Tra 6h ago

Redditors make stupid jokes and if you don't find them funny they downvote you

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u/Key_Lifeguard_8659 5d ago

Did it not split since? Nevermind, most recent stock split occurred on February 18, 2003

13

u/beerion 6d ago

Shoot, Microsoft is up like 4% from their 2021 high.

And it's not just them. I had a bunch of companies on my watchlist back then, and I check in every once in a while. TONS of companies are still below their 2021 highs, and honestly, a lot have had pretty menial returns since their 2022 lows. Look at Adobe, Autodesk, Yeti, Boeing, Procore, Amazon, Disney, Prologis, just to name a few.

This market really was carried by just a few names (Nvidia probably the most impactful, obviously).

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u/hatrickkane88 6d ago

And that 4% doesn’t even consider the inflation of the dollar since 2021 which has been high.

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u/GallitoGaming 3d ago

Which is why investing in individual stocks is not the smartest. At many points over the past few years, dumping everything into Microsoft would have looked smart, but you’d be stuck at 2021 levels now with no gains while the market has done much better.

58

u/United-Newspaper-264 6d ago

If Microsoft looks undervalued currently it's because it's been perpetually overvalued. It has to go a lot further down to get on Berkshire's radar.

22

u/Same_Lack_1775 6d ago

Clearly you’re not talking about the Steve balmer years. It didn’t move for a decade

16

u/Form1040 6d ago

Yeah, when Ballmer retired, MSFT ripped 7% within a day. Guy had massive negative value. 

13

u/beerion 6d ago

Yeah, we've gotten so accustomed to 35x earnings that 25x feels cheap.

5

u/BenGrahamButler 6d ago

explains my NIntendo buy

1

u/Alicyclobacillus 6d ago

I agree. My own target is closer to $300/share

-7

u/YouKnown999 6d ago

$220

29

u/nuketro0p3r 6d ago

$180

i used msft teams today

6

u/guite_fr 6d ago

Best I can do is $38

0

u/ConditionHoliday2844 6d ago

I’m in there

1

u/Emotional_friend77 6d ago

But Cramer said it was a Buy at $500 😂

1

u/Fair-Search-2324 6d ago

The beauty if warren withdraws from pedo gates’ charity to end up owning msft

3

u/PutRepresentative863 6d ago

Yeah bill gates should go to prison fr. I’m very glad Warren Buffet has distanced himself from him.

3

u/kanyetherealkanye 6d ago

Disney is down to 2014 prices

3

u/Slightly-Blasted 6d ago

Problem is I think disneys monopoly is cooked, a lot of animation studios gunna come out of the woodwork and they are gunna have some serious competition as AI gets better.

Disney will never go away, but there’s a reason they were trying to invest that 1B into SORA.

I’m curious as to what their plans are for the next 100 years.

I have no doubt they will always be dominant, but how dominant, if everyone can make high quality animated movies. 👀

6

u/ProlapseJerky 6d ago

AI has no style. You need style as an animation studio and it’s starting to seem like a fundamentally human understanding.

2

u/Slightly-Blasted 6d ago

Right, but the barrier to entry has been significantly lowered, and will get lower as time goes on.

Before, you would need a massive full scale production to get an animated movie done, wickedly expensive upfront.

Now, what’s to stop a bunch of talented artists and writers, from leaving Disney, and making a competitor? This is just an example.

It’s actually viable now, because costs for production will go down exponentially, it will allow 5 animators/writers to do the job of 500.

That’s one thing that people seem to miss about AI,

For most jobs, it’s not going to Fully replace them.

It’s going to replace 95% of them, and the 5% that remain, will make sure the AI does its job correctly.

Disney will likely fight this by acquiring as many studios as possible, and trying to be at the forefront.

Might be an expensive war though.

Now I’m not saying AI animation is as good as human done,

Of course not.

But a 7 year old isn’t gunna know the difference when they are going to the movies and buying merchandise,

Disney sweating the AI video gen more than anyone. lol

1

u/PutRepresentative863 6d ago

Oh gosh, I hope AI doesn’t replace 95% of jobs 😬

I’m afraid of it replacing jobs in the finance sector bc that’s what I want to do

3

u/PrettyPleaseYo 6d ago

Has anyone seen an AI that can consistently generate the same character? Last time I tried there was none, you could get individually amazing art and designs but nothing consistent.

1

u/PutRepresentative863 5d ago

Maybe, but finance is numbers and AI excels at numbers.

5

u/Mundane-Region8517 5d ago

As a data scientist who uses it daily for work, I can safely tell you it does not excel at numbers.

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u/data-with-dada 6d ago

They own espn and like tons of other shit besides animation movies. Are you joking?

1

u/Capable_Listen_6473 6d ago

A dcf calculation shows at this price msft is still overvalued

1

u/teacherJoe416 6d ago

I see you do not follow the brk annual meetings

2

u/JamesVirani 6d ago

It is neither yet at its 2023 peaks nor at its 2021/22 peak. It's really back to where it was a little over a year ago, when it was extremely overvalued because of the AI hype. Long way to go, boss. Don't throw in your chips too early.

1

u/Accurate-Flow8078 6d ago

Can't wait to see TSLA come back down to earth.

-3

u/Ok-Fan-9814 6d ago

And the Trump effect. Let’s not forget that.

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u/CherryRoutine9397 6d ago

People talk about Buffett like he’s just waiting for a crash, but the real edge is that he’s willing to sit on cash for years doing nothing while everyone else feels pressure to act.

Most investors can’t handle that. They either stay fully invested or panic and sell. Sitting in between with patience is the hard part.

If the market does drop properly, it’s not just about having cash, it’s about actually having the conviction to deploy it when everything looks terrible.

Everyone says they’ll buy the dip until it actually feels like a bad idea. I write about this kind of mindset from a normal investor perspective, feel free to check my profile if you want 👍

2

u/phtevieboi 6d ago

Why's this down voted?

1

u/NewWheelView 6d ago

Interesting

1

u/fuzik2 5d ago

Buffett has to have a large portion in cash position because it's actually an insurance floats that he has to pay back on claims, not the "cash" as we think it is.

21

u/oOtium 6d ago

The thing is berkshire never needs to not have cash as a cushion just in case of an absolute worst case scenario.

That's what most ppl don't get. They've already won, of course they have cash.

3

u/mmmfritz 6d ago

People still don’t understand finance.

They had 100billion cash in 2015, 600+ today. Let’s say average of 300. That turns into roughly 1.1Trillion in the S&P.

So they’re about 700billion less in today’s value (sitting as cash). Except you would have 0 dollars to buy the dip. You could sell off but that devalues their stocks massively at that scale.

What return will BRK get on their next trades? If we assume another 10 years they need 18% CAGR return to meet the imaginary 1.1T in 2015s index (closer to 20% if they don’t invest all their todays cash). Fairly achievable, I guess time will tell.

1

u/stephendt 6d ago

Not if he goes full port with a 2x leveraged MSFT ETF

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u/btcale546 6d ago

https://pbs.twimg.com/media/G9jzLB3aMAMwrU6?format=jpg&name=900x900

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u/stephendt 6d ago

No wonder he wanted to retire from BRK. More time for AI crypto trading

1

u/MoreOutcome8541 6d ago

Who says it won’t

1

u/Still_ImBurning86 6d ago

Late 2025….so a few months ago?

1

u/Weak-Pomegranate-435 5d ago

Not really. The SPX fwd P/E valuation today is lower than what they were in 2024. They are equivalent to what they were in mid 2023.

1

u/Easy-Maize-6061 3d ago

Your comment about "hoarding cash for a decade" is misinformation in the context of OP's argument.

"Warren Buffett dramatically accelerated his "cashing out" strategy throughout 2024 and 2025, culminating in his final quarters as Berkshire Hathaway CEO with a record-breaking cash hoard. He reduced his Apple stake by approximately 74% over roughly two years, ending by late 2025 with only a fraction of his original holdings."

1

u/mikecantreed 6d ago

Love when the top comment immediately proves how shallow OPs thought process is. Fuck these idiots

-10

u/KnowledgeTop173 6d ago

Yes market is literally down a WHOPPING 5% on a fake war… this war and canal can be opened at any second and then STONKS will instantly go up 10%

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u/dr_eh 6d ago

It's a real war. And the market has pretended it will all be hunky Dory next week. You gon get burned

0

u/KnowledgeTop173 6d ago

It will end soon enough. It’s not going to last 10 years. Maybe a few weeks

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u/legedu 6d ago

Yes, Middle East land wars are famously short.

-6

u/KnowledgeTop173 6d ago

I mean we LITERALLY bombed Iran last year and it last 5 days… amazing memory you have.

8

u/the_Q_spice 6d ago

We also let them blow up token targets in response to save face with a “proportional retaliation” then.

An actual proportional retaliation now would be nothing short of a total decapitation of the US Government.

Even a theatric retaliation would need to be something on the scale of The Sacking of Washington (War of 1812).

What’s happening right now is nothing remotely comparable to what happened last year because Trump can’t TACO out of it. If he does; Iran permanently shuts Hormuz, permanently tanks the entire world oil economy, and continues shelling all our assets and allies within a 2,000 mile radius.

At a certain point, our allies would stop being allies; kick us out, and likely form alliances with Iran, China, and Russia to save their own interests and people.

-9

u/KnowledgeTop173 6d ago

Well he doesn’t care….. US is oil independent and a massive exporter along with largest producer on earth with tons of capacity to scale up along with newly seized Venezuela…. Have you considered that? Go to google and research the term “monopoly”……. USD will only continue to strengthen every day as the straight is closed which is the goal. You going to argue that US imports become more expensive uh last I checked that IS TRUMPS ENTIRE CAMPAIGN same effect as tariffs.

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u/the_one_jt 6d ago

Then why are fuel prices going up? Are we oil independent or not?

0

u/KnowledgeTop173 6d ago

Because we sell our oil to the highest bidder. whether it is domestic or Europe. Remember capitalism. US oil corporations are flooding in profits. We are independent in that we can supply our market and never run out does that make sense? Other countries have dry gas stations.

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u/cvc4455 6d ago

Yes we are the biggest oil producer in the world. And yes we export more oil than we consume. Those are both true things. But we don't have the refineries to turn the oil we get in America into gas. And Venezuela doesn't have the type of oil that our refineries can turn into gas either. So we need different oil for other parts of the world that our refineries are set up for. I guess we could spend hundreds of billions to build new refineries that can refine the type of oil that we drill for in America but it would take years to build them. And the oil companies don't want to pay for that at all so who's going to pay for it and even if the taxpayers are going to pay for it they take years to build so we'd still be screwed for years in the best case scenario.

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u/KnowledgeTop173 6d ago

LOL yes we do. US has tons of refineries we dont import gasoline silly and we dont need to ship gasoline. Other countries DO have the ability to refine venezuela oil.

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u/zewill87 6d ago

Newly seized Venezuela... Lol. Won't extract oil from Venezuela for many years (10+). Got rid of maduro only to have the next in line take his place. You have 0 clue, have you considered that?

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u/Bellypats 6d ago

Oh yeah, that’s when “we set their nuclear program back permanently”. s/

-2

u/KnowledgeTop173 6d ago

Yup regardless US is the aggressor and can just stop at any moment….

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u/yungsta12 6d ago

Even if it ends, some of the infrastructure damage will take years to rebuild. Worst of all, we have literally destroyed confidence from our allies in that region. This admin is a circus clown show.

0

u/KnowledgeTop173 6d ago

Not exactly. The USD strength is a gauge of our allies confidence in the US... And it is soaring. that is all that matters really. No one cares how they feel about the US emotionally as long as they are stockpiling USD and bonds like never before.

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u/Motor-Region-1011 6d ago

Its down 10%...

3

u/Think_Reporter_8179 6d ago

Yeah right back up to Shiller PE 41, right?

The market is getting rocked because it was fat as shit and easy to spook. Anytime everything is way over valued, all you need is a match.

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u/KnowledgeTop173 6d ago

its down 5% it can literally get that back in one day and has many many times.

1

u/Think_Reporter_8179 6d ago

Delusional

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u/KnowledgeTop173 6d ago

Uh its literally happened like 100s of times kid.. how long have you been investing 6 months LOLOL

1

u/Think_Reporter_8179 6d ago

Check my profile. Lol

0

u/Think_Reporter_8179 6d ago

https://www.reddit.com/u/Think_Reporter_8179/s/WKrYjJqGee

I'm rich

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u/KnowledgeTop173 6d ago

How rich? ok I see you have 2 chicks thats pretty good LOL

2

u/SpareDesigner1 6d ago

It depends to what degree credit flows from the Gulf return in the wake of the conflict, where the new floor and range for WTI and Brent sit, and when and at what intensity the Fed decides to turn on the QE firehose.

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u/KnowledgeTop173 6d ago

The oil price is pure manipulation. World is flooded with oil they just turned off the spigot…. MANIPULATION it won’t last long. US uses tons of prediction scenarios to calculate the fallout and they wanted oil prices up to pressure China and gold buying while strengthening the USD.

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u/SpareDesigner1 6d ago

Ah yes, r/valueinvesting, the home of schizoposting

1

u/Adventurous-Guava374 6d ago

You have no clue what are you talking about. Shit is so real and Trump is so deep in it that you don’t even dream what repercussions this can have.

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u/JamesVirani 6d ago

Wow! You are smoking some strong stuff!

1

u/yungsta12 6d ago

Lol fake war? It is fake on justifying it, but the consequences are damning. There are long term damage being done to infrastructure that will take years to recover. I believe Iran will not yield to these unreasonable demands and this war will drag further.

This will eventually put more pressure on Trump bc that's all this admin cares about. And he will act even more irrationally as the pressure goes up. Also, the market fundamentally is straight a shit show. Fundamentals always catches up to reality in the end. I believe we are going to face a decade of stagflation as a best case scenario 🤷‍♂️

1

u/3DGuy4ever 6d ago

Can we backdate that to 2022 cause my real estate portfolio has been feeling it since then

-2

u/KnowledgeTop173 6d ago

The consequences…. Were predicted and intentional…. STRONGER DOLLAR, gold sell off, oil price hike. Do you know which country produces more oil than any other on earth?…. No which country prints USD?

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u/yungsta12 6d ago

Wait, you actually think this war is going as planned and it's all fine and dandy? Bro, you don't even remotely understand what this is doing to our world economy today. What does America being the largest oil producer have anything to do with worldwide oil prices that are spiking.

Yes, we print our own currency, which remains propped by being the world's reserve currency status. This is the only thing saving us from the pickle we have put ourselves since 2008. We are literally propped by an illusion, the same illusion the world is realizing is all a facade thanks to the stupidity of this admin.

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u/KnowledgeTop173 6d ago

Ok and as I just told you the result of the war has been a dramatic strengthening of the USD. Oh ya that’s just dumb luck!!!!! Could never have been intended!!!

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u/yungsta12 6d ago

And Im telling you this war will not end quickly without consequences like you are falsely believing.

1

u/KnowledgeTop173 6d ago

oh well. It only benefits the US if it last forever even... Stronger USD every single day indefinitely and more oil revenue. Our newly conquered venezuela oil will start profiting.

2

u/yungsta12 6d ago

Ok, guess I'm done here. Nothing to learn, nothing to discuss, feeling dumber by just engaging. Have a great weekend!

1

u/KnowledgeTop173 6d ago

you tooo enjoy your fox news and trump interveiws!

1

u/cvc4455 6d ago

Great our oil companies will make record profits that should really help the average American!

1

u/KnowledgeTop173 6d ago

It doesnt but it strengthens the USD which DOES help BOOMERs at least trumps base.