In turbulent times, the true nature of the stock god is revealed! Berkshire Hathaway stands firm amidst the plunge of the US stock market

When the market is in turmoil and the cries of despair are everywhere, Berkshire Hathaway, led by "stock god" Warren Buffett, stands firm against the tide, remaining unscathed amidst the sharp decline of the U.S. stock market.

On Thursday, Berkshire's Class B shares fell by 1.4%, which is undoubtedly an outstanding performance compared to the S&P 500 index, which plummeted by 5% and saw a market value evaporation of $2 trillion.

Last year, Berkshire achieved remarkable results. Operating income grew by 27% compared to 2023. Since 2021, this income has been steadily increasing. In the first quarter of this year, while the S&P 500 index experienced its worst quarterly performance since early 2022, dropping by 4.6%, Berkshire's stock price soared by 17.3%.

Christopher Davis of Hudson Value Partners commented:

“Berkshire's performance is a rock in the storm of tariffs.”

Berkshire: A Safe Haven Amid Market Turbulence

For many investors, Berkshire Hathaway is considered a "barometer" of the stock market. Owning Berkshire stock is equivalent to indirectly holding shares in numerous large companies carefully selected by one of the best in the investment world.

Berkshire's stable performance is partly due to one of its main sources of income—its insurance business—which is relatively unaffected by global trade. Although the KBW Insurance Index fell by 2.7% on Thursday, Berkshire's direct competitor Geico's rival, Progressive Corp., rose by 2%, becoming the best performer in that index.

CFRA analyst Cathy Seifert pointed out:

“Insurance companies also have pricing power, so inflation caused by tariffs leads to increased costs for car repairs and home construction, which will ultimately be passed on to consumers.”

Berkshire also has dozens of operating businesses, making it a diversified investment vehicle primarily investing in domestic stocks and companies tracking the U.S. market, while hoping to outperform market returns in the long run.

Comparative analysis also indicates that "Cathie Wood" and Warren Buffett are often seen as polar opposites in the investment world. Wood bets on high-risk, high-reward emerging technologies such as artificial intelligence and biotechnology, while Buffett prefers stable cash flows and high brand appeal in industries like insurance and consumer goods. Comparing the investment return performances over the past decade, ARK Invest's annual average return rate is 4.87%, while Berkshire's annual average return rate is 9.83%.

Long-Termism: Buffett's Winning Formula

Although Berkshire's overall performance is stable, some of its major holdings, such as Bank of America, Chevron, and American Express, also saw declines on Thursday. Additionally, with Apple’s market value evaporating by more than $300 billion, Buffett's decision to reduce his stake in the iPhone maker last year seems quite prescient.

Currently, Buffett is leveraging his long-term investment strategy, which is to be greedy when others are fearful. Analysts point out that Berkshire holds a significant amount of cash, allowing him to seize opportunities to acquire companies at more reasonable valuations. In recent quarters, the 94-year-old billionaire has avoided making major deals, instead accumulating a record cash reserve, which reached $334.2 billion by the end of 2024. Davis stated:

“During sell-off periods, people always expect to see a large acquisition or the use of cash.”

However, Berkshire's stock is not cheap. Buffett typically prefers to use the price-to-book ratio (P/B) to assess his businesses. This ratio is currently at a 10-year high, close to 1.8. Although he has relaxed the standards for stock buybacks in recent years, he previously limited them to a price-to-book ratio below 1.2