Berkshire Hathaway Meeting Talking Points:
- Berkshire Hathaway shares sit at record highs prior to the company’s annual shareholder meeting
- Warren Buffett will be the center of attention, after making many bold moves in the market last year
- Meme stock investors will most likely disregard the insight from the “Woodstock for value investors”
All eyes will focus on Los Angeles this weekend, as Warren Buffett and Charlie Munger host Berkshire Hathaway’s annual shareholder meeting virtually. Last year, Buffett struck a sour tone when describing the state of the pandemic and his outlook for various secrets within capital markets. Most notably, Buffett and Berkshire unloaded their entire position in the domestic airline industry, reflecting the growing worries surrounding pandemic-affected industries.
Buffett, a disciple of Benjamin Graham, looks to purchase and hold securities whose prices are substantially lower than their intrinsic value. Taking a top-down approach, Buffett focuses on companies themselves rather than the supply/demand factors relationship that determines price on a daily level. Prior to the meeting, Berkshire stock sits at all-time highs as the company’s equity investments continue to produce stellar returns and look set to benefit from a reopening of the economy.
Berkshire Class A Stock Monthly Chart
Chart created on TradingView
Shareholders attending the virtual summit are expected to press Buffett and Munger on a variety of issues, ranging from cryptocurrencies, asset bubbles, Buffett’s decision to dump airlines last year, and the $138 billion that Berkshire is sitting on. While many will press Buffett on what he deems to be attractive, a large crowd of investors will be tuning out the noise coming from Los Angeles.
| Change in | Longs | Shorts | OI |
| Daily | 1% | -4% | -2% |
| Weekly | 18% | -17% | -4% |
The antithesis of Buffett following, or the “meme-crowd,” will most likely cast away any headlines that come from the Berkshire annual meeting. The chasm between value-oriented investors and thrill-seeking “traders” has only widened during the pandemic, as cheap money flooded into the stock market and fueled a speculative mania earlier in 2021. The market appears to be dividing into two segments; one side dominated by those investing in undervalued and underappreciated assets, while the other side chases speculative gains via options or short-squeezes. For more on this speculative mania, please click here.
While Buffett will most likely be asked about the strange phenomena that have captivated the investing community this year, those that perpetrated those events will most likely ignore any such remarks. Buffett, who recommends that people purchase index funds for risk management and diversification purposes, has warned investors in the past not to chase speculation in risky assets. However, with a new breed of investors being born during the pandemic, Buffett’s advice may fall on deaf ears.
--- Written by Brendan Fagan, Intern for DailyFX
To contact Brendan, use the comments section below or @BrendanFaganFX on Twitter
