Barstool Sports founder and mouthy trader Dave Portnoy got plenty of heat last month for calling Warren Buffett an “idiot” after the Berkshire Hathaway BRK.B, -0.13% boss unloaded his airline stocks and missed out on a big rebound in the beaten-down sector.
According to Shane Parrish of the popular Farnam Street blog, that’s all part of the plan:
‘You have to be willing to look like an idiot in the short term to get the best long-term results. I’d suggest that because the future has become increasingly uncertain, he’s preparing for the widest range of possible futures.’
That’s how Parrish, hailed as “Wall Street’s biggest influencer,” described Buffett’s current investment strategy in a recent interview with Business Insider. “When you don’t understand with a certain degree of certainty, you sit out until you do,” Parrish added, addressing criticism that Buffett has raised cash when he should be taking a more active role in profiting from the chaos.
Parrish, who has hundreds of thousands of Twitter TWTR, +1.50% followers and has interviewed some of the biggest names on Wall Street, has been obsessed with Buffett for years. His blog is named after the street address of Berkshire’s corporate headquarters.
“Buffett has taught me to be conscious about happiness, be conscious about being optimistic about the future based on the past, and just constantly having a smile and having fun with life,” Parrish once wrote in a post about Buffett’s impact on his life beyond just investing. “It’s not about being purely rational about every minute of your day and optimizing your time. It’s about living life.”
And with that, Parrish said he’s confident in the direction Berkshire is headed.
“People always seem to want the optimal solution for the moment, and thus he ends up looking out of touch at times,” Parrish, a longtime attendee of Berkshire’s annual meeting, told Business Insider. “But you have to be willing to do something different to get different results.”
Buffett, putting some of that $137 billion in cash in play, has been more active lately, with Berkshire having closed a $10 billion deal for Dominion Energy’s D, +2.11% natural-gas assets.
But Parrish said Buffett is still focused on protecting his investors and keeping plenty of that cash on hand to help navigate the ups and downs of this treacherous climate.
“You can’t win if you don’t finish… you can’t compound if you zero out,” Parrish said. “In periods of high uncertainty, you want to ensure you have the most possible options.”
Or, as Parrish put it in a tweet last month:
Cash looks to be a decent place to be heading into the new, earnings-heavy week, with the Dow Jones Industrial Average DJIA, -0.23% , S&P 500 SPX, +0.28% and tech-heavy Nasdaq Composite COMP, +0.28% all setting up for a lower open Monday.
