Warren Buffett Shows Investors How He's Beating The Market During This Correction

Photo Source: Masterworks

This post contains sponsored advertising content and is for informational purposes only. It is not intended to be investing advice.

In January 2000, Warren Buffett battled investors’ pessimistic view of Berkshire Hathaway (NYSE: BRK-A) when its stock returned to a near 52-week low. His favorite stocks, Coca-Cola KO, Freddie Mac FMCC, and Gillette, were crumbling before his eyes. And when Buffett said he couldn’t “see” what technology businesses will look like in 10 years, many tech investors thought Buffett was a relic of the past.

Little did critics know, the tech bubble would burst in just two months. At the time, Buffett warned his shareholders that most investors were “dancing in a room in which the clocks have no hands.” And Buffett was right.

While the Nasdaq had a near 50% loss, Buffett enjoyed 80% gains over the next two years. And several years later, he became the wealthiest person in the world.

Recently, the same story has been playing out once again. While most investors are investing in meme stocks, SPACs, and Bitcoin, Buffett stayed away from the shiny objects. He proclaimed, “I don’t have any Bitcoin. I don’t own any cryptocurrency. I never will.”

And in January 2022, Bitcoin dropped by more than 50%, erasing over $1 trillion in the cryptocurrency market along with it. Meme stocks like GameStop peaked at $500 a share and now trade below $100. And the WSJ reported, “The SPAC ship is sinking. Investors Want Their Money Back.” 

Recently, everyone’s been watching Cathie Wood, The CEO of Ark Invest, who has the complete opposite investing strategy than Warren Buffett. While Buffett focused on adding “old-fashion” companies, Wood was grabbing new tech stocks such as Tesla, Zoom, and Coinbase (crypto exchange).

Her strategy worked spectacularly for a moment. Since the start of the pandemic, her fund’s ETF had nearly tripled at its high point. Her tech-focused fund was the toast of Wall Street and praised for its “innovation.” 

That is, until The Fed announced they'll be forced to increase interest rates soon to combat the recent 40-year record inflation. Suddenly, the market sentiment shifted from enthusiasm for growth stocks to safety stocks. And after, Wood’s fund lost more than 54% in value. 

Meanwhile, Buffett’s portfolio has been steadily throttling upward all this time, seemingly resistant to the sudden market shift. Through the decades, Warren Buffett is still steadfast in his investment strategy, and it’s made him the greatest investor of all time. 

Buffett still owns several stocks he bought decades earlier, such as American Express (1963) and Coca-Cola (1994). His new investment in Apple (2016) is perhaps the most bullish and daring move he made in recent times. 

And while holding “old” companies might seem boring, his advice for investors in 1999 still rings true today. He said calmly, “you can’t look around for people to agree with you.” As Buffett inches toward the finish line today, many investors who criticized Buffett back in 2000 have already disappeared from the spotlight. 

Alternative Investments For The Current Market Correction? 

In his 2014 annual shareholder letter, Buffett revealed he invested in farmland as an alternate investment. “I needed no unusual knowledge or intelligence to conclude that the investment had no downside and potentially had substantial upside.” Buffett said, “Now, 28 years later, the farm has tripled its earnings and is worth five times or more than what I paid.” 

Most investors never consider alternative assets. And most don’t know that 73% of ultra-high net worth Americans, surveyed by UBS, had considered buying a particular alternative asset to diversify their portfolio in recent years. 

Lately, The Rothschild sold it for $197 million. Oprah Winfrey grossed $62 million. And Jeff Bezos sold Amazon stocks and purchased $70 million of them. Some of the ultra-wealthy are getting into art, an alternate asset class, for some reasons: 

Blue-chip artworks have appreciated 23.2% on average when inflation is at least 3%. It has outpaced the S&P 500 by 164% from 1995 to 2021. And now, investors can invest in this overlooked alternate asset alongside the ultra-wealthy with Masterworks. There are more than 320,000 members on the Masterworks art investment platform; signup is required for investors. 

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This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.