Spotlight: Why Warren Buffett is buying like it’s 2008

by

Jack Derwin

May 23rd 2022 3 minute read

While market nerves have set in for some investors, Warren Buffett is living his ‘be greedy when others are fearful’ ethos and spending big on stocks. These are the 5 big business stories from the week that was.

1. What’s Buffett Buying?

Amazon, Apple, Microsoft and Google have now collectively shed US$2 trillion since 2022 began as the selloff rolls on but Warren Buffett isn’t worried.

The veteran investor is on his biggest buying spree since 2008, picking up more Apple stock on the downswing and finding other opportunities he believes are undervalued.

Buffett has found an unlikely ally in Michael Burry from The Big Short who despite his concerns over bubbles was seen recently buying major tech names Amazon and Meta.

While neither knows where the market might go next, it’s encouraging to see the famed investors recognising value and staying their respective courses, however different.

2. In Retrospect 

Significantly, this week also marked the respective anniversaries of both Amazon and Meta. It’s interesting then to look back and see how their success unfolded. 

Amazon went public 25 years ago. Had you bought $1,000 worth of shares back and held that stake would be worth millions today but only had you managed to hold on.

When the dot-com bubble burst in 2000, Amazon fell 90%. Those who didn’t panic would have eventually seen another crash in 2008 before AMZN soared into the history books.

3. Downsizing

Today tech companies are aware they’re entering a new market phase. Netflix let go of 150 staff this week while Coinbase and Meta paused hiring and others start to downsize

Those in a job though are laughing. Employers are bumping up tech salaries to retain talent, with Microsoft going as far as to double its payroll budget to keep seats filled.

On that note, the broader jobs market is frankly about as good as it gets. In Australia the unemployment rate is at its lowest point since 1974 even if jobs growth is slowing. 

4. On Demand

More on Netflix. The streaming giant is due to trial live streaming shows direct to households to keep growing users and differentiate itself from an overcrowded field.

It could also roll out live voting during talent competitions. Not only might the move help boost engagement but it could free Netflix up to introduce more unscripted content.

This could mean more standup comedy as well as live sports streaming – an untapped market. After the huge success of Drive to Survive, F1 would be a likely contender.

5. New Tricks

Apple looks like launching its first new product in eight years. Bloomberg reports that the tech company previewed a ‘mixed-reality’ headset to its board this week.

While details are sketchy, the product seems more similar to a set of glasses than a VR setup. External sensors would reportedly overlay images on top of the real world.

While similar products have failed before, it marks Apple’s first attempt. If a US$3,000 price tag doesn’t scare buyers away, it could just be the next big tech battleground.

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