Updates Monday 5/4/20

Below is an excerpt of our weekend analysis posted Sunday 5/3/20.

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Invest: Long Term Portfolio

​Starting in early February, we wrote that you might want to sell high and use asset allocation strategy to rebalance the portfolio and reduce stock exposure in long-term portfolios.   We ourselves got out of all stocks in our long-term portfolio in February.

Since the Down Trend started on 2/20, we recommended to stay in cash for now because the current Down Trend is not over yet.  

Apparently, Warren Buffet agreed with us.  He revealed the following information in Berkshire annual meeting on Saturday 5/2.

• Despite the massive $137B cash pile, Berkshire reduced its stock buyback, even though its own share got substantially cheaper during the 1st quarter.
• Berkshire sold more than $6B of stocks in April, making Buffett a net seller of equities so far this year.   It sold all its airline stocks among others.  
• Buffett had historically been encouraging investors to take advantage of market downturns and being greedy when others are fearful.   Yet despite the huge market drop in the 1st quarter, Buffett had stayed on the sideline.   He revealed that he isn’t seeing any market opportunities so far, even in his own stocks.

So if the famous long-term investor Warren Buffett isn’t buying right now, we certainly are not deploying long-term money into the stock market just yet.

If we were still holding stocks in a long-term portfolio, we would try to sell weaker stocks, just like Buffett did, to take advantage of the current higher price, before Dive2 takes off for real.

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