Wall Street's biggest influencer says Warren Buffett might look 'out of touch' but that's a key element of his success

• Warren Buffett did little during the market meltdown because he wasn't sure how the coronavirus pandemic would develop, Wall Street influencer Shane Parrish told Business Insider.
• "When you don't understand with a certain degree of certainty, you sit out until you do," the Farnam Street blogger and host of "The Knowledge Project" said.
• Buffett was expected to buy stocks, strike bailout deals, and make a big acquisition when markets tanked, but instead he added to Berkshire's huge cash pile and sold his airline holdings.
• "You have to be willing to look like an idiot in the short term to get the best long-term results," Parrish said.
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Warren Buffett took cover during the coronavirus crash because he didn't know how the pandemic would play out, Wall Street's biggest influencer suggested in an interview with Business Insider this week.

"I'd suggest that because the future has become increasingly uncertain, he's preparing for the widest range of possible futures," Farnam Street blogger and "The Knowledge Project" host Shane Parrish said.

"When you don't understand with a certain degree of certainty, you sit out until you do," he added.

Parrish, who interviews billionaire investors such as Ray Dalio and Bill Ackman on his podcast, cautioned that he couldn't speak for Buffett. However, his obsession with the famed investor and Berkshire Hathaway CEO lends some credibility to his speculations.

The former Canadian intelligence official often draws on Buffett's biography, philosophy, and personal habits. For example, his past blog posts advise readers to focus their efforts, constantly read and learn, and stay within their circle of competence.

Parrish has also attended Berkshire's annual meetings for more than a decade, and named his blog after the company's street address in Omaha.

Looking like an idiot

Buffett has been accused of losing a step since he failed to deploy Berkshire's massive cash pile when markets tanked earlier this year.

The 89-year-old investor was widely expected to bolster his stock portfolio, strike the types of bailout deals he made during the financial crisis, and bag the "elephant-sized acquisition" he has promised for years.

Instead, Buffett added about $9 billion to Berkshire's cash hoard in the first quarter, cashed out his stake in Goldman Sachs, and sold his positions in the "big four" US airlines in April at a loss.

"People always seem to want the optimal solution for the moment, and thus he ends up looking out of touch at times," Parrish said about the backlash.

"But you have to be willing to do something different to get different results," he continued. "And that means you have to be willing to look like an idiot in the short term to get the best long-term results."

Buffett is already showing signs of renewed vigor. Berkshire recently closed a $10 billion deal to acquire Dominion Energy's natural-gas assets, and appears to have repurchased more than $5 billion worth of its stock in recent weeks.

However, Buffett's primary focus will undoubtedly be protecting his shareholders' money and keeping ample cash on hand that he can use both offensively and defensively.

"You can't win if you don't finish," Parrish said. "Perhaps more importantly for him, you can't compound if you zero out."

"In periods of high uncertainty, you want to ensure you have the most possible options."

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source https://www.businessinsider.com/wall-street-guru-shane-parrish-warren-buffett-could-still-triumph-2020-7