Warren Buffett pointed out the important differences between himself and Wall Street in his latest letter to his latest shareholder Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B). He noted that he did not use revenue before interest, taxes, depreciation and amortization (ebitda), calling financial metrics “Wall Street’s flawed favorites.”
This fork in EBITDA reflects the tip of the iceberg, which can normally be described as a different perspective. Does Buffett know that Wall Street isn’t? The answer is as clear as the day.
Image source: The Motley Fool.
Until recently, Wall Street looked really tired. S&P 500 It rose 28.5% between January 1, 2024 and February 18, 2025. However, the index fell 7% from the peak.
why? Perhaps the biggest reason is that investors are worried about the negative impact of the Trump administration’s proposal Customs.
The interesting thing about this is that President Donald Trump is doing exactly what he said he did when he ran towards his second presidential term (or at least take the first step). Trump has promised tariffs. Now he’s moving to implement them.
But the tips for respite from collecting customs duties sigh from Wall Street. You might say that the market is in a “hope/worry” cycle.
Meanwhile, most analysts still recommend buying stocks that have led bull markets over the past few years or so. For example, 58 out of 63 analysts surveyed lseg March view nvidia As a purchase or a strong purchase, we recommend that outliers keep stock.
This optimism is not limited to Nvidia. However, Wall Street has generally remained positive despite the stock market, which has historically been valued at a high level. Look at the Schiller S&P 500 cape ratio. Despite having declined over the past few weeks, metrics are still approaching the second highest level.
Buffett wasn’t as bullish as Wall Street. That’s evident in his actions as the stock market surged.
For one thing, the large investors have been net sellers of stocks for nine consecutive quarters. Certainly, “Olcle of Omaha” continues to buy some stocks. However, he hasn’t found much in his taste lately.
Buffett even refused to allow a share buyback in Berkshire Hathaway in the fourth quarter of 2024. This is impressive considering Berkshire bought back at least some of its shares in the last quarter over the past five years.
What a buffet I have it But building a large cash reserve. He tried to downplay this in a recent letter to Berkshire Hathaway shareholders, saying, “Even though some commentators now consider it an extraordinary cash job in Berkshire, the majority of your money remains in the stock.”
it’s true. However, it is also true that Berkshire’s cash position is $334.2 billion. teeth Special (as shown in the following chart).
Did you know that Buffett doesn’t do that Wall Street? yes. And I think we can summarise it by one of his most famous statements.
Buffett understands that the best time to buy stocks is when they are on sale. Despite analysts continuing to urge investors to hand over their fists, he hadn’t thought it was for a while.
Perhaps the most important thing Buffett knows that what Wall Street doesn’t seem to be at first glance is the importance of focusing on the long term. He doesn’t think he’s worried about the impact of tariffs as he expects them to be temporary. As Buffett recently wrote to Berkshire shareholders about the stocks owned by the conglomerate:
Over time, we think that profits are likely to win – why buy these securities? – Yearly numbers become rough and unpredictable. Our horizon for such commitments is almost always much longer than a year. In many cases, decades have to do with our thinking. These long-term purchases may ring the cash register like church bells.
I don’t hear people on Wall Street make such statements. But Buffett’s long-term perspective is the main reason why he was so successful. The difference between his outlook and Wall Street is as clear as the day.
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Keith Speets I have a job at Berkshire Hathaway. Motley’s fools have taken and encouraged Berkshire Hathaway and Nuvidia to work. To Motley’s fool Disclosure Policy.
