Warren Buffett and his cabinet Berkshire Hathaway is in a crisis. With too much cash on the sidelines, Buffett and his company could take another blow in the face of a possible uncontrolled rise in the inflation rate.

The US Federal Reserve is likely to keep rates lower for longer, even if that means letting inflation go above 2%. While it may be difficult to justify evaluations on some growth stocks, there are pockets of undervaluation, just as there are pockets of severe overvaluation that stock pickers can take advantage of in the New Year.

As the great Warren Buffett said, investing is a game without called strikes. You don’t have to swing if you don’t want to, and you can choose to swing on terrains that no one else wants.

Warren Buffett will recover from this crisis

While Warren Buffett has been busy in 2020, with eyebrow-raising buys, especially in defensive areas of the market with a wide range of health stocks, the gold miner Barrick Gold and the strong Japanese trading companies “sogo shosha”, it is undeniable that the man was not as active as he should have been. It has also had its fair share of blunders, most notably with the premature sale of its airline shares in the heat of panic.

It’s easy to criticize the Oracle of Omaha and conclude that the man lost his investment advantage for his wrong moves (or lack thereof) in the first half of last year. But, for the first time in history, the pullback is 2020.

If Warren Buffett had had a crystal ball handy, he would have put Berkshire’s silver reserve to work in a steep collapse that we now know to be one of the biggest short-term buying opportunities of all. the times thanks to the US Federal Reserve which wasted no time intervening to prevent a continued fall into the abyss.

Don’t expect Warren Buffett to go greedy next year

Going forward, I suspect Warren Buffett isn’t trying to make up for his lack of aggressive buying activity amid the market slump from February to March. If, like Buffett, you didn’t buy as much as you would have liked in the panic stock market crash, stop kicking yourself.

Instead, take a page from Warren Buffett’s playbook, focusing on the way ahead, rather than dwelling on a past that you can’t change, or worse, trying to compensate in a much more expensive stock market. by buying stocks at any price. Mr. Market asks.

Berkshire Hathaway has enough money to pick up an elephant. But if the right price cannot be met, I expect Warren Buffett to continue to sit on his hands, as patient as ever.

Of course, investors are pressuring the man to swing. But he won’t swing until he sees a good chance to take one out of the ballpark. Until then, don’t expect him to give in to the pressure and swing for the fences on anything that can deliver anything other than a Grand Slam circuit.

Take away idea

I suspect Warren Buffett is more likely to make modest purchases in areas of the market that would be immune to the downfall of the current market frenzy. While others are betting big on Bitcoin, EV makers and the like, I guess Buffett will be looking at high value games like Suncor Energy or revive its stake in Barrick Gold, which could help Berkshire manage inflation risks from the stimulus measures that are likely on the horizon.

Silly contributor Joey frenette owns Berkshire Hathaway shares (B shares). The Motley Fool owns shares and recommends Berkshire Hathaway (B shares) and recommends the following options: $ 200 short put options in January 2021 on Berkshire Hathaway (B shares) and $ 200 long calls in January 2021 on Berkshire Hathaway (B shares).