The Trump 2.0 era "high volatility" may become the norm; it might be worth imitating "stock god" Warren Buffett to hold these few defensive stocks steady

According to the Zhitong Finance APP, Warren Buffett, known as the "Oracle of Omaha," has created returns for long-term shareholders of Berkshire Hathaway (BRK.A.US)(BRK.B.US) that could change their fortunes. Even after sixty years, this tireless "Omaha prophet" continues to generate excess returns for shareholders of this $1.1 trillion investment empire. With a holding size of short-term U.S. Treasury bonds larger than that of the Federal Reserve, along with record cash and cash equivalents reserves, and a stock portfolio with a strong risk-averse character, the "Oracle" successfully avoided the continuous decline of U.S. stocks since February and achieved significant excess returns through his risk-averse portfolio and reserves of cash and short-term U.S. Treasury bonds.

Buffett continues to advocate the "cash is king" strategy with practical actions, as Berkshire Hathaway's cash reserves have reached a historic high again. The world's most famous stock investor has shown an immense preference for cash since 2024, interpreted by the market as a bet that the U.S. economy and U.S. stocks will face turmoil. It has proven that the "Oracle" indeed has foresight; at the beginning of 2025, the shadow of "stagflation" loomed over the U.S. economy, causing the S&P 500 index to underperform most emerging markets and European stock indices this year, while the Nasdaq 100 index has given back all its gains for the year.

Berkshire Hathaway's latest financial report shows that the insurance profits in the fourth quarter surged, driving operating profits up by 71%. While continuing to reduce stock holdings, cash reserves reached a record $334.2 billion, marking the tenth consecutive quarter of growth. Notably, cash now accounts for 29% of total assets, a new high in decades.

Buffett's shareholder letter states that he significantly increased the holdings of short-term U.S. Treasury bonds in 2024, and most of the aforementioned cash reserves likely belong to the short-term U.S. Treasury bond portfolio, which has seen a foreseeable substantial increase in investment returns. In terms of short-term U.S. Treasury bonds (i.e., those with a maturity of one year or less), Berkshire has continuously expanded its holdings of short-term U.S. Treasury bonds since 2024, with a holding size much larger than that of the Federal Reserve's short-term U.S. Treasury bond holdings. Moreover, since the beginning of this year, the massive returns from the soaring short-term U.S. Treasury bonds, driven by bond price spreads and interest, may rival the returns from Buffett's stock investment portfolio.

Short-term, highly liquid financial instruments, such as short-term U.S. Treasury bonds with a maturity of one year or less, commercial paper, and bank deposits, are often viewed by the investment community as cash equivalents that can be quickly liquidated due to their high liquidity, extremely low risk, and price stability, meeting investors' needs for immediate redemption.

Looking ahead, the term "high volatility" is likely to be a keyword in the stock market during the Trump 2.0 era. If one wishes to dance with the legendary investment master while attempting to avoid the severe declines brought about by high volatility, the following three "hedging stocks" from Berkshire are worth paying attention to: Visa (V.US), Coca-Cola (KO.US), and Occidental Petroleum (OXY.US) Compared to the frequently reduced holdings in American banks and Apple by Warren Buffett, the positions of these three companies have remained "steadfast" for a long time.

One cannot help but admire Buffett's almost "prophetic" investment vision and extremely sensitive capital instincts. The short-term U.S. Treasury bonds heavily held by Buffett, along with the aforementioned three stocks, significantly outperformed the global stock market benchmark index during the recent turmoil in the global stock market, and their comprehensive performance this year has greatly surpassed the so-called "tech stock barometer" — the Nasdaq 100 index, which has been in a continuous decline since February, highlighting the "hedging investment value" of achieving excess returns amid a stock market crash.

Due to Trump's insistence on imposing tariffs on China, Canada, and Mexico, the global stock market has experienced severe downturns, and concerns about broader future tariffs have intensified. The "momentum trading" driven by animal spirits was completely reversed last Thursday, with the technology and communication services sectors that led the way in 2023-2024 becoming the worst-performing sectors in 2025. Meanwhile, traditional defensive sectors such as healthcare and consumer staples surged overnight. Visa, Coca-Cola, and Occidental Petroleum remained strong and closed higher last Thursday amid declines in the three major U.S. stock indices.

Visa: The global digital payment artery, with steady performance growth over the long term, is known as an "invisible cash printing machine."

This well-deserved fintech giant, although only accounting for 1% of Berkshire's nearly $300 billion stock portfolio, has demonstrated astonishing investment return capabilities, with Visa's stock price rising by 15% this year, significantly outperforming the S&P 500 index.

Visa's exclusive digital payment network covers over 200 countries and regions, connecting 4.7 billion debit and credit card bank accounts with up to 150 million merchants worldwide, processing an astonishing 31 billion transactions in 2024, totaling nearly $16 trillion.

As the digital "artery" of global economic transactions, its meager transaction fees accumulate to an annual net profit of $19.7 billion (for the fiscal year ending September 30, 2024). Visa's solid position as a fast and secure payment service provider allows it to benefit from the long-term growth of the global economy. According to analysts' general expectations, double-digit revenue and net profit growth in the coming years will support its 17-year dividend growth legend and the profit growth pace that can be described as an "invisible cash printing machine."

Coca-Cola: The "liquid gold" with 63 years of dividend growth.

Coca-Cola, in which Buffett has held shares for over 30 years, is not only synonymous with carbonated beverage brands but also encompasses a full range of beverage empire including bottled water, dairy products, coffee, and juice. With its global beverage distribution network and incredibly strong brand appeal, this global beverage leader has continuously transformed company profits into new product innovations and shareholder returns, having a Coca-Cola holding worth $28 billion for Berkshire. With the growth potential in both domestic and international markets, this holding still has appreciation potential.

For over thirty years, Coca-Cola has been one of the core holdings in Buffett's Berkshire. Given the substantial potential for growth in both the U.S. and international markets, Berkshire Hathaway's $28 billion stake in this global beverage leader may further appreciate in the coming years, which is why Buffett has not made any reductions in his holdings for a long time

Occidental Petroleum: A Dual-Track Maverick in Traditional Energy and Carbon Capture

As a new favorite of Buffett, Occidental Petroleum has recently seen Berkshire Hathaway significantly increase its holdings, bringing Berkshire's stake close to $13 billion. This energy company, which controls high-quality oil wells in the U.S. Permian Basin, not only occupies an important position in the crude oil extraction market due to its scale and infrastructure advantages, but also possesses expertise in enhanced oil recovery techniques that utilize carbon dioxide to improve production efficiency, giving it an edge over competitors. It completely crushes small and medium-sized crude oil market rivals and, under the leadership of CEO Vicki Hollub, is positioning itself in the trillion-dollar carbon capture market—having already established carbon management partnerships with Microsoft and AT&T, with plans to build a thousand carbon storage facilities globally. This dual-engine model of "traditional energy cash flow + emerging decarbonization business" is reshaping the logic of energy investment