Buffett: If Berkshire's stock price plummets by 30%, I would see it as a very good opportunity, and I would not worry.

Buffett: If Berkshire's stock price plummets by 30%, I would see it as a very good opportunity, and I would not worry.

Warren Buffett, the renowned investor and CEO of Berkshire Hathaway, has been known for his ability to capitalize on market volatility, particularly when he finds undervalued businesses. Despite the recent downturn in the US stock market, Buffett's investment firm has shown resilience, with Berkshire Hathaway's stock price up nearly 18% since the start of the year, while the S&P 500 has fallen by 6% [1].

The recent rebound in US stocks, which has seen a rise of almost 11% since the first week of April, is a positive sign. However, the uncertainty surrounding US tariffs and their potential economic impact continues to be a cause for concern. The 90-day tariff pause will end in July, and the ongoing 10% tariffs could potentially lead to another stock market sell-off [1].

Buffett's investment strategy appears to be cautious at present. While the CNN Fear & Greed Index remains low, indicating that many investors are still in a state of panic, Buffett's actions suggest that he is not yet ready to be "greedy" in the US market. Instead, he is exploring opportunities abroad, as evidenced by Berkshire Hathaway's recent purchases of shares in Japanese conglomerates like Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo [1].

These Japanese companies are trading at relatively cheap valuations, with Price-to-Earnings Ratios ranging from 8.5 to 11.5, Price-to-Sales Ratios from 0.6 to 0.7, and Price-to-Book Ratios from 0.9 to 1.7. This strategic move by Buffett indicates a preference for international shares over US stocks, at least for the time being [1].

Berkshire Hathaway's first-quarter earnings report further underscores the impact of geopolitical risks and tariffs on the company's performance. Operating earnings fell by 14%, with a significant decline in insurance-underwriting profit due to the uncertain environment created by President Trump's tariffs and other geopolitical risks [2]. Despite this, Buffett's long-term view remains steadfast, as reflected in his comments at the recent annual meeting, where he emphasized that the company's cash hoard has reached a record high of over $347 billion [3].

Buffett's cautious approach is a reminder that even in volatile markets, patience and a long-term perspective are crucial. His strategy of buying when others are fearful and avoiding the market when it is overvalued has served him well over his long investing career. As the US stock market continues to grapple with uncertainty, investors would do well to heed Buffett's advice and remain vigilant, waiting for the right opportunities to present themselves.

References:
[1] https://uk.finance.yahoo.com/news/us-stock-market-starts-rebound-061100870.html
[2] https://www.cnbc.com/2025/05/03/berkshire-hathaway-brka-earnings-q1-2025.html
[3] https://search.yahoo.com/search?fr2=p:fp,m:tn,ct:all,kt:org,pg:1,stl:txt,b:&fr=fp-tts&p=Warren+Buffett