Warren Buffett's approach to declining markets

The stock rise that had so much potential is losing momentum.

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Three weeks in a row, the S&P 500 has posted a lower weekly finish. The year's gains for the Dow Jones Industrial Average have been lost. With increased volatility comes a greater desire for put options to hedge against losses. As January goes, so goes the year, is appearing to be a worthless proverb.

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It's very depressing and feels like déjà vu after a terrible 2022. The economy is booming, just like it was at this same time last year, but because inflation is rising too quickly, the Federal Reserve will have to end the celebration. There is no doubt that is negative for stocks.

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Despite the fact that Berkshire Hathaway reported an operational deficit in the fourth quarter, famed investor Warren Buffett remained calm. For the first time in its 58-year history, the company's book value decreased annually last year.

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Buffett expressed the same level of optimism in his letter to shareholders. "I have yet to see a period when it made sense to place a long-term wager on America," he said, "despite our folks' penchant—almost enthusiasm—for self-criticism and self-doubt."

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The well-known aphorism of British economist John Maynard Keynes, "The long run is a false guide to current circumstances," stands in direct contrast to that. We are all going to die eventually, he wrote in 1923.

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The best mentor here still seems to be Buffett. Stocks do occasionally decline. But more frequently, they increase.

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A table of returns for Berkshire Hathaway and the S&P 500 since 1965 may be found on Buffett's letter's opening page. Over the time period, the index has gained 9.9% annually on a compound basis. 19.8% is the corresponding return for Berkshire stock.

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The long view may actually be preferable.

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CEO of Berkshire Hathaway mocks critics of buybacks

Despite the decline in bond and stock prices last year, Berkshire Hathaway CEO Warren Buffett has maintained his optimism. Buffett expressed his confidence in the resiliency of the American economy to shareholders in his annual letter on Saturday. I have yet to see a situation when betting against America over the long haul makes sense, he added.

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• By the end of 2022, American Express Co., Bank of America, Chevron, Coca-Cola, HP, Moody's, Occidental Petroleum, and Paramount Global were all owned by Berkshire. The conglomerate took advantage of the market slump in 2021, when buybacks were king, to purchase company stock.

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• The letter was critical of those who support corporate share buybacks. According to Buffett, anyone who claims that their actions harm shareholders or the nation is "either an economic idiot or a silver-tongued demagogue (characters that are not mutually exclusive)". In 2022, Berkshire spent $8 billion on its stock.

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• President Joe Biden has recently criticized buybacks, especially by oil companies with record profit, and wants to quadruple the current 1% buyback tax, according to Berkshire Hathaway, which stated in an email toTrade Algo that the comment was "written six months ago and not directed at anybody specific."

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• Due to Burlington Northern's declining railroad profit and a weaker U.S. dollar, Berkshire Hathaway's operational earnings for the fourth quarter decreased by 8% to $6.7 billion after taxes. Operating earnings for the year increased by 12% to a record $30.8 billion after taxes.

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Talks Between Pfizer And Seagen

According to Trade Algo, a multinational pharmaceutical giant is in talks to buy the biotech startup Seagen in a deal that might be worth more than $30 billion.

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• Now valued at around $30 billion, Seagen would certainly need to be acquired for more money. According to the article, which cited unnamed persons familiar with the matter, the conversations are still in their early stages and there is no assurance that a transaction would take place.

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• Due to patent expirations, Pfizer may lose $17 billion in sales by 2030; however, the agreement may make up for that loss. An early Monday remark request went unanswered from Seagen. Pfizer chose not to respond.

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• The report claims that Pfizer has a healthy cash position, with the pharmaceutical firm having about $22.7 billion from sales of its Covid-19 vaccines, medications, and other products.

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Tesla's Third Master Plan for Expansion is Announced by Elon Musk

At the company's investor event on Wednesday, Tesla CEO Elon Musk promised a "Master Plan 3" for the electric-vehicle manufacturer, touting it as a way to "a totally sustainable energy future for Earth," but experts anticipate it to be a blueprint for a new generation of Tesla cars.

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• To ensure its growth through the end of the decade and defend its market share against all the EV models established auto companies are building, several analysts think Tesla needs a more affordable vehicle. A third-generation car priced around $30,000, according to Wells Fargo analyst Colin Langan, may increase Tesla's market share.

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• According to Evercore ISI analyst Chris McNally, Tesla's third master plan may be connected to Master Plan 2, the March 2016 statement that included references to robotaxis, "megapack" batteries, and recycling goals. This plan had ambitions for car-sharing and an electric bus that have yet to materialize.

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• With Tesla's advantage in battery costs and EV manufacturing, New Street Research analyst Pierre Ferragu believes a lower-priced car with a sticker price of $25,000 might be ready by 2025. By 2026, it might sell a million units annually. He believes Tesla's energy storage division will have a successful year.

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• For 2023 and 2024, respectively, analysts expect earnings per share to be around $4.10 and $5.60, led by Tesla's auto industry. George Gianarkas, an analyst at Canaccord, is interested in new commercial vehicles like the Semi truck, which started delivering in December, as well as a stock repurchase.

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Big Tech and Telecoms to Discuss Financing Improvements

The Mobile World Congress, a telecom conference with an anticipated 80,000 attendees this year, including industry executives, inventors, and regulators, will be in full swing this week in Barcelona, Spain. Although it is anticipated that artificial intelligence will take center stage, a dispute in Europe between tech and telecom companies over who will pay for network infrastructure upgrades threatens to overshadow it.

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• According to Reuters, the European Union is considering how to pay for improvements in internet access. It has been recommended that major internet firms that drive a lot of traffic to the networks, like Apple, Google's Alphabet, Netflix, and Meta Platforms, shoulder more of the costs of maintaining them.

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• The EU started a 12-week "consultation" last week to get feedback on the ideas. According to Reuters, representatives from Alphabet, Meta, and Netflix are anticipated to protest the EU, and Netflix CEO Greg Peters will meet with the EU's internal market commissioner Thierry Breton there.

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• Tech companies claim to have already invested in the networks. The report said that European telecommunications companies including Deutsche Telekom and Telecom Italia have been vocally in favor of including levies from big tech.

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• The conference's agenda also includes discussion on the upcoming 5G technology. Smartphones from Honor, OnePlus, Huawei, and HMD's Nokia will be among the products that are anticipated to be unveiled at the conference.

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Congress considers hearings on the derailment of an Ohio train

The Department of Transportation's response to the Norfolk Southern train disaster in East Palestine, Ohio, in early February and the ensuing environmental dangers are the subject of a letter request from the House Oversight Committee to Transportation Secretary Pete Buttigieg.

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• James Comer, a Republican from Kentucky, is the chairman of the Oversight committee, and Jamie Raskin, a Democrat from Maryland, is the ranking member. The letter was also signed by Ohio Republican Rep. Jim Jordan. The committee expressed worry over the "slow pace" of the Transportation Department in resolving the issue.

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• According to Axios, the House Transportation and Infrastructure Committee and the House Energy and Commerce Committee are thinking about conducting their own inquiries. The House Energy Committee is comprised of East Palestine-based Ohio Republican Rep. Bill Johnson.

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• President Joe Biden has refuted charges that his administration has failed to address the situation, while GOP Rep. Elise Stefanik of New York told reporters at a ribbon-cutting ceremony on Friday that "I think there will be congressional hearings on the Transportation and Infrastructure Committee."

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• On Saturday, representatives from federal organizations such as the Environmental Protection Agency, the Centers for Disease Control and Prevention, and the Federal Emergency Management Agency went door-to-door in East Palestine to provide residents with more information on the resources that are available.