In an Era of Uncertainty, Warren Buffett Was Right Again


During the first quarter of 2025, the U.S. stock market experienced significant volatility. A correction phase began, centered around big tech companies like Tesla, Apple, and Microsoft, and the market once again entered a period of uncertainty. In this environment, the investment strategy of the "Oracle of Omaha," Warren Buffett, is once again proving its worth. His conservative approach and market forecasting abilities continue to demonstrate their enduring value.

There Was a Reason for Stockpiling Cash

As of the fourth quarter of 2024, Berkshire Hathaway's cash reserves increased to a record-high $167.7 billion. According to Yahoo Finance, this decision reflected Warren Buffett's concerns about the market. And true to his prediction, the U.S. stock market entered a correction phase in early 2025.

Investors are taking note of Buffett's conservative approach. Despite being 94 years old, his market insight remains sharp. Buffett, judging that the market was generally overheated, adopted a defensive strategy by increasing his cash position—a decision that appears very appropriate given the current market conditions.

Buffett's long-standing investment philosophy that "there's no better investment than buying a good company at a cheap price" shines even brighter in these uncertain times. He has stockpiled ample firepower for the right buying opportunities.

Construction Stock Investments and the Coincidental LA Fire

Buffett's sharp insight was also evident in his construction stock investments. From late 2024, Berkshire Hathaway invested in home construction companies including D.R. Horton, Lennar, and NVR. This is analyzed as a decision anticipating mid to long-term demand in a situation of housing supply shortage and high interest rates in the United States.

Then in February 2025, a large wildfire broke out near Los Angeles, California. This resulted in the loss of thousands of homes and construction sites, and as reconstruction demand was expected to increase, construction-related stock prices surged in the short term. Some market analysts evaluate this situation as "Buffett once again making an agile prediction."

Of course, the LA fire was an unpredictable event, but it's clear that Buffett's fundamental, long-term reasons for investing in construction stocks were accurate. He has always placed more emphasis on a company's intrinsic value and the long-term outlook of an industry rather than short-term market movements.

Proven Stability of Traditional Industries

During January to March 2025, market volatility increased due to the Federal Reserve maintaining benchmark interest rates, stagnant inflation, and various geopolitical risks. The correction was particularly pronounced among technology stocks.

In contrast, Berkshire Hathaway's returns, with its high proportion of traditional industries such as construction and finance, were relatively stable. This demonstrates once again the validity of Buffett's long-emphasized principle of "invest in businesses you can understand."

Berkshire Hathaway's portfolio consists of companies that are easy to understand and have stable cash flows, such as Coca-Cola, Bank of America, and Apple (though the position has been recently reduced). This approach particularly shines during periods of high market volatility.

The Ability to Read Market Cycles

Buffett has always shown an exceptional ability to read market cycles. He famously said, "Be fearful when others are greedy, and greedy when others are fearful."

The vast cash he currently holds will provide opportunities to buy good companies at cheap prices when the market falls. Historically, Buffett has made enormous profits through bold investments during times of financial crisis or market collapse.

Notable examples include his investments in Goldman Sachs and Bank of America during the 2008 financial crisis, and his investment in Japanese trading companies early in the 2020 COVID-19 pandemic. And in 2025, he seems to be waiting for a similar opportunity once again.

The Power of Unchanging Investment Principles

Warren Buffett's investment philosophy is simple: invest in businesses you can understand, approach with a long-term perspective, and use market volatility as an opportunity. And above all, know the value of cash and have patience.

The market situation in early 2025 has once again proven that these principles remain valid. While flashy tech stocks were declining, Buffett's approach, which stays true to the basics, is once again gaining attention.

When asked, "What's the secret to successful investing?" Buffett often replies, "Rule number one: never lose money. Rule number two: never forget rule number one." This simple principle has made him the world's greatest investor, and it's proving to be still valid in the uncertain market of 2025.

Warren Buffett is still right. And we still have much to learn from him.

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