I don’t know how it is where you live, but around these parts, in Washington, D.C., anxiety over coronavirus is off the charts. The panic buying started with hand sanitizer and toilet paper, then spread to bread and frozen veggies—and, of course, alcoholic beverages. We are rapidly adjusting to the concept of “social distancing,” with closures of schools and workplaces and places of worship, not to mention cancellation of sports and cultural events. The list of shuttered stores is steadily growing.
Panic has touched the financial markets, too, except instead of panic buying there’s panic selling. U.S. stocks finally succumbed to the bear 11 years and two days after the bull started its charge. Volatility in stocks is making my head spin like Linda Blair’s in The Exorcist. With events canceled, travel slowed to a trickle and malls akin to ghost towns, the smart money is betting on a recession.
Wisdom from Warren. When times turn tough, investors turn to Warren Buffett. Buffett may have lost a step with his company’s stock performance over the past decade, but since he took control of Berkshire Hathaway in 1965, he has walloped the S&P 500. And at nearly 90, he hasn’t lost his cool demeanor in a crisis or his fervent belief that stocks will always rebound.
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We had scheduled the article What Warren Buffett Is Buying because May is the month Buffett disciples descend on Omaha for Berkshire Hathaway’s annual meeting, a.k.a. “Woodstock for Capitalists.” (The 2020 pilgrimage to Omaha is another casualty of coronavirus, although the meeting, sans shareholders, will be live-streamed on Yahoo Finance. The dinner at Gorat’s Steakhouse and 5K run will have to wait another year.) We focus on investments that Buffett is buying, or at least was buying as of the end of 2019. When the markets started tanking, we thought Buffett might just double down on these stocks, believing that they look even more attractive at a discount.
In October 2008, as the financial crisis was raging, Buffett wrote in the New York Times that he was buying stocks in his personal account, repeating his mantra: “Be fearful when others are greedy, and be greedy when others are fearful.” In recent interviews, he has pointed out that this crisis isn’t as scary (at least for financial markets) as in 1987 or 2008. Twelve years ago, the financial system was plagued with problems and investors wondered if their money market funds would lose value.
As executive editor Anne Smith writes in our special coronavirus coverage, the market could rebound by year-end, and most strategists (like Buffett) are urging investors to take advantage of a rocky market to gradually add to holdings at bargain prices. (Subscribe to our free “A Step Ahead” e-mail newsletter for daily news on coronavirus developments and the economy.)
You may be wondering what all this has to do with the photo above, in which Buffett is whispering in the ear of an unidentified woman. Well, that woman is my mother-in-law, Elaine. She and my father-in-law, Frank, were visiting my wife, Allyson, and me in Washington in October 2007. They were staying in a Northwest D.C. hotel, and Elaine spotted an older gentleman in the lobby. “Has anyone ever told you that you look like Warren Buffett?” she boldly inquired. “Oh, I’m much better looking than he is,” he replied, and then he showed her his driver’s license. He was on his way to his 60th high school reunion at D.C.’s Wilson High (where my son is now a teacher). When Elaine asked him why he was staying at that hotel, he pointed down the block, to Geico headquarters.
Frank and Allyson soon joined the conversation, and Astrid, Buffett’s wife, gamely took some pics of them. (I was at home, but their encounter has always reassured me that Buffett is the real deal—authentic, approachable and witty.) A few days later, Frank sent $5 and a request for an annual report to Berkshire headquarters. The report came back with a hand-written note: “To Frank and his good-looking wife.” Signed, Warren E. Buffett.
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