Warren Buffett turns 89 this Friday, and there’s been a lot of attention given to his recent performance.
But before getting into that…
With seed capital of around $10,000 in the mid-1950s, Buffett masterfully invested his way to a net worth of around $79 billion.
His technique is simple: He focuses on what he knows (namely financials, information technology and consumer staples) and then buys companies he believes have unique competitive advantages over the long term – and he holds them – sometimes “forever.”
Oh, and along the way, he collects massive dividends.
This year alone, Berkshire Hathaway stands to generate more than $4.6 billion in dividend income. In Buffett’s mind, collecting dividends allows him to withstand the inevitable market downturns that seem to pop up when they’re least expected.
I’m bringing this up in today’s Trade of the Day because Berkshire Hathaway (NYSE: BRK.B) shares are down 3% this year – compared with the 14% gain of the S&P 500.
So as we begin hearing the dreaded R-word more frequently (recession), it might be smart to take a look at Berkshire Hathaway as an undervalued “safe haven” play in the midst of today’s increasing market uncertainty.
Here’s the scoop…
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Currently trading at around 1.3 times book value, Berkshire Hathaway seems like a bargain, which is why Pershing Square’s Bill Ackman has made Berkshire Hathaway one of his largest holdings.
Also, as of June 30, the company had $122 billion in cash – and you know Uncle Warren likes to make big acquisitions. Granted, he might be a little gun-shy after the Kraft Heinz debacle, but he still has plenty of gunpowder to reload another shot – which could be the trigger catalyst that gets Berkshire Hathaway moving upward.
With quarterly earnings growth year over year of 17.2%, Berkshire Hathaway is one play that’s as safe as you can get.
Action Plan: As Berkshire has strong “double bottom” support at $197.50, buying shares at this level looks like a safe way to do what Buffett knows best: buying low.
If the threat of a recession continues to loom large, this might be the best safe-haven play the market is offering you right now. For more insight like this, feel free to join our Trade of the Day e-letter! It’s free and packed with useful tips and tricks.
[adzerk-get-ad zone="245143" size="4"]About Bryan Bottarelli
Whether it was selling the Star Wars figures he collected as a little boy for 50 times their value or using the $125 he made cutting grass to buy a Michael Jordan rookie card that he later sold for $1,500, it was always clear that Bryan Bottarelli was a born trader – possessing the unique ability to identify opportunities and leverage his investments.
Graduating with a business degree from the highly rated Indiana University Kelley School of Business, Bryan got his first job out of college trading stock options on the floor of the Chicago Board Options Exchange (CBOE). There, he was mentored by one of the country’s top floor traders during the heart of the technology boom from 1999 to 2000 – trading in the crowded and lively Apple computer pit. Executing his trades in real time, Bryan learned to identify and implement some of his most powerful trading secrets… secrets that rarely find their way outside the CBOE to be used by individual traders.
Recognizing the true value of these methods, Bryan tapped into his entrepreneurial spirit and took a risk. He walked off the CBOE floor and launched his own independent trading research service called Bottarelli Research. From February 2006 to December 2018, Bryan gave his precise trading instructions to a small, elite group – most of whom have been followers ever since.
As a “play tactician,” Bryan uses his hands-on knowledge of floor trading to shape opportunities and chart formations into elegant, powerful and profitable recommendations. And by using the same hedging techniques taught by professional floor traders, Bryan is able to deliver his readers remarkable gain opportunities while strictly limiting their total risk.
Along the way, Bryan has developed a cumulative track record that could impress even the most successful hedge fund manager.
He now spends his days moderating one of the most elite trading research forums ever created: The War Room.
