MW Warren Buffett proves, once again, why he's the best

By Tomi Kilgore

Just days ahead of Berkshire Hathaway's annual shareholder meeting, the stock has outperformed the market by a wide margin - as usual

Warren Buffett keeps doing what he's always done - showing us why he's the GOAT.

There's a saying that a rising tide lifts all boats. So the true test of an investor is how they perform during the most uncertain and volatile times.

And it's fair to say we are now in very uncertain times. In just the past month, "uncertainty" has been used in roughly 300 earnings calls of S&P 500 companies, according to AlphaSense data, while 327 companies have reported results.

The reason is the ever-changing tariff environment and data showing that the economy is slowing. That's perfect for Buffett.

Read: Stock's market's post-GDP whiplash shows it's 'foolish' to expect anything but volatility

While the S&P 500 index SPX has run up 9.2% amid an eight-day winning streak as of afternoon trading on Thursday, it has still dropped 8.3% since its record close of 6,144.15 on Feb. 19.

Meanwhile, since Feb. 19, shares of Buffett's investment vehicle, Berkshire Hathaway Inc. $(BRK.B)$, have rallied 9.9%.

During that 51-day stretch, the outperformance of Berkshire's stock over the S&P 500 reached a high of 26.5 percentage points on April 3, when President Donald Trump's "liberation day" tariff announcement rocked the stock market.

"Buffett is proving that he's ahead of everybody else, again," said Mike O'Rourke, chief market strategist at JonesTrading and a noted Buffett watcher. "He's just doing what he's always done."

The last time Berkshire Hathaway's stock outperformed the S&P 500 over a 51-day period by as much as it has during the recent stretch was at the height of the financial crisis in October 2008. There were also a number of times it did so during the dot-com crash of 2000.

Before that, as old-timers recall, it did so in early 1998, in the period leading up to the Russian debt crisis that prompted the collapse of hedge fund Long Term Capital Management.

Investors will surely be looking for some guidance about the current uncertain and volatile market environment when the so-called Oracle of Omaha speaks at Berkshire's annual shareholder meeting on May 3.

But it's not like Berkshire's stock only performs well during tough times.

Many had questioned Buffett's stockpiling of cash in late 2024, when the artificial-intelligence boom kept pushing the stock market to new highs. And Buffett didn't own any shares of Nvidia Corp. $(NVDA)$, which fueled the AI boom.

In the year leading up to the S&P 500's peak on Feb. 19, Berkshire's stock rallied 18.9%, to underperform the S&P 500 by just 3.6 percentage points.

The correlation between the stock and the S&P 500 was 0.89, while a reading of 1.00 would mean they moved exactly in sync.

In the 10 years to Feb. 19, meanwhile, Berkshire's stock has soared 224.8%, while the S&P 500 has climbed 191.9%. The correlation between the two over that time was 0.97.

Some may wonder, what did Buffett know as he started trimming his equity stake, which included slashing his stake in Apple Inc.'s stock $(AAPL)$, well ahead of the peak?

As O'Rourke says, Buffett isn't trying to predict the future. He's doing what he always does and adjusting his positions based on the value he sees of the businesses he understands.

Basically, he wants to own stocks of good companies at good prices, O'Rourke said. If prices become to expensive by his measure, he's not opposed to taking some profit, and he's not worrying about how much more prices might rise.

He doesn't try to pick tops or bottoms and sells into strength while buying on weakness.

So if the stock market continues its recent run to new highs, Buffett won't care that he had already sold. If, however, the recent downtrend continues as the economy keeps slowing, O'Rourke noted that he has built up enough cash that he can go shopping for attractively valued stocks.

Perhaps on Saturday investors will get some hint of what may be coming next. And maybe they'll listen this time.

-Tomi Kilgore

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May 01, 2025 16:05 ET (20:05 GMT)

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