To The Moon

Taking the safer route

Berkshire Hathaway is a name synonymous with legendary investor Buffet. And whatever trades or investments they do, it is normally associated with him. That is not surprising considering the fact that he is the brains behind the company and his lieutenants are all moulded according to his beliefs. 

When Berkshire takes a huge position, many take notice. That is a huge vote of confidence for that particular company as the metrics he use is not easy to pass for many. And when he buys, it only means that he sees value but one thing that I believe sets him apart is his willingness to take risks. And that is why he is very particular in looking for companies that are well protected by a moat.

When we look at TSMC, we can see that it is a fantastic company well ahead of its peers in its technology moat. It is depended upon heavily by the tech sector and in fact a very essential part of the supply chain. Similar to how some big financial orgainisations are too important and hence keeping them safe is important to the economic fabric. 

However, TSMC is a foreign company which is at risk to geopolitics (Think China vs USA). They are taking efforts to shift some operations to US and elsewhere but the risks remain. With the recent standoffs between US and China,the showdowns between these two heavyweights can only be expected to continue and despite many believing neither will take the risks to escalate, the risk is still there. 

Someone like Buffet probably does not like this risk despite the excellent fundamentals. Thatis how I see it. That is probably explaining whyhe is divesting BYD also which actually has a huge runway ahead of it. He is just derisking his assets.

And if my analysis is correct, we are due a sharp pullback in the markets. Buffet and his lieutenants are probably preparing for such an event and he will most likely go on a buying spree in the next few quarters. If there are not many choices to go along with the derisking, he probably might not do it. But with so many choices, he may have come up with a shopping list and decided that it is more worthwhile to shift his assets to a 'less risky' one according to his metrics. 

Thanks for reading!

$Apple(AAPL)$ 

$Taiwan Semiconductor Manufacturing(TSM)$ 

$Semiconductor Bull 3X Shares(SOXL)$ 

$Lucid Group Inc(LCID)$ 

$Tesla Motors(TSLA)$