What Would Warren Buffett Buy In This Panic?

There has been a huge panic in the global financial markets caused by the COVID-19 coronavirus. Some people compare this panic to the one in 2008. Others compare it to the ones in 1987 and 1929. Certainly, there have been enormous amounts of financial wealth that have been vaporized. In this insight, we discuss what stocks that Warren Buffett would buy in this panic.

Berkshire Hathaway Inc Cl B (BRK/B US) stock price is down 13.3% YTD, slightly outperforming both the S&P 500 (SPX INDEX) and DJIA. Warren Buffett is probably already scooping up some of the beaten-down stocks in his portfolio. Rather than adding new names, he is probably adding to the existing stocks in the Berkshire Hathaway portfolio. In early March, it was reported that Berkshire Hathaway added to its stake in Delta Air Lines. This was prior to the COVID-19 confirmed cases ramping up significantly in the U.S., although COVID-19 was already making a major negative impact in Asia, in countries such as China and South Korea. In our view, Warren Buffett may have added to some key stocks including Amazon, Kroger, Apple, and Costco in the past few days when the panic in the markets has been the greatest since the GFC in 2008.

On 15 March, it was reported that there were 76 new daily cases of COVID-19 in South Korea (over a 24 hour period). This was a major achievement since it was the first date in which there were fewer than 100 new daily cases in 23 days. Since the end of February, there have been a steady decline in new daily cases in South Korea. Despite the problem of not blockading travelers from China, South Korea has shown that rapid testing, quarantine, wearing masks, and "keeping social distance" work effectively.