In early May, tens of thousands of people came to Omaha for the Berkshire Hathaway Annual Meeting, hosted by Warren Buffett. The event brings in millions of dollars for hotels, restaurants and retailers. Almost every hotel room was booked.
We resisted the temptation to rent out a spare office to overnight guests, but we did see a couple of benefits from the Buffett gathering.
Just days before the Annual Meeting, the potholed street in front of our offices was resurfaced in record time. The scheduling may have been a coincidence. Then again, our neighbor across the street is Borsheims Fine Jewelry, a Berkshire-owned company and site of several events tied to the Meeting.
More importantly, Mr. Buffett made two observations that affirm what you’ve heard us say:
• Fixed-income securities are way overpriced, with yields that provide little or no return after inflation. “Long-term bonds are a terrible investment at current rates.”
• Holding cash is better than overpaying for stocks. A “sensible purchase price,” Buffett says in the Annual Report, “proved a barrier to virtually all deals we reviewed in 2017.” The first quarter report from Berkshire shows that they have 32% of their marketable securities in cash.
Volatility will create opportunities for investors who have an eye for value. In the meantime, we’ll keep adding to our wish-list of interesting prospects.
Barry Dunaway, CFA®
Executive Vice President & Director of Research
America First Investment Advisors, LLC
This post expresses the views of the author as of the date of publication. America First Investment Advisors has no obligation to update the information in it. Be aware that past performance is no indication of future performance, and that wherever there is the potential for profit there is also the possibility of loss.