Why Warren Buffett’s bet on Japan could change on high inflation and a weak dollar

Berkshire Hathaway Inc.’s 6.2 billion forest billionaire Warren Buffett’s hopes among Japan’s five largest trading houses may indicate that inflation and the falling US dollar may make international equations more attractive when economies around the world recover from the coronovirus epidemic .


Berkshire said late Sunday, on Buffett’s 90th birthday, that it owned more than 5% each of Itochu Corp, Marubeni Corp, Mitsubishi Corp, Mitsui & Co Ltd and Sumitomo Corp, and said it would own its steak Can reach up to 9.9%.

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Trading houses known as Sogo Shosa with their diversified business lines, including commodity exploration, have fitted the giants’ taste for classic value stocks that have lost investor favor.

Berkshire investors said they have welcomed Buffett’s bets, at a time when US stock valuations are at their highest level since the tech bubble of the 1990s, raised by giants such as Apple Inc. and Amazon.com Inc. Tha both invest in Berkshire.

Bill Smade, chief investment officer at Smack Capital Management, said, “Inflation cocktails are being mixed and Buffett is sending his investment to a place where you can create value through inflation.” “These are companies that will make more money if the price of oil (or) any input increases.”


Gold, inflation-linked bonds and some commodity prices have since March been feared that global central banks’ more than $ 9 trillion incentives to tackle the epidemic will fuel high inflation.

The Federal Reserve indicated last week that it would be slower to contain inflation should it move above its 2% target.

At the same time, the decline in the US dollar and the decline in the US dollar, which is now near a two-year low, make Japan and other international markets more attractive to US investors, said Jim Paulsen, chief investment strategist at the Louth Group. Can make Paulson said of the Berkshires of Berkshire that the expectation of the dollar’s weakness strengthens the case for American investors if profits are boosted by the strength of the currencies they hold in these denominations. “Options. This move fits in with Buffett’s long-standing choice for price shares.

“Warren is trying to expand his horizons, but his roots in the US market are very expensive at one time,” said Paul Luntzis, president of Lorenz Asset Management.


Jamie Rosenwald, co-founder and senior portfolio manager for Asia and Japan Investments at Dalton Investments, said Buffett “found a bargain at lower prices on the stock market” reflecting the “tremendous values ​​available in Japan today”.

Buffshire, which adopted optimism at Berkshire’s annual meeting in May in its ability to remain in the US through the epidemic, has seen outside the country before companies such as Israel’s IMC International Metals and German motorcycle apparel retailer Dettell Louis Is purchased. Henry H. President of Armstrong Associates, James Armstrong said, “Buffett certainly loves the United States, investing a quarter of its wealth in Berkshire.” Given that he was able to tap into a global network and companies with his fingers. Lots of pees at an attractive price, this is a winning combination. ”

Guy Spier, portfolio manager at Aquamarine Capital in Zurich, said bets on Japanese companies could strengthen Berkshire’s Chinese market, saying those businesses spent more time dealing with growing China than many more. ”

Warren Buffett billed $ 2.9B in billions of dollars and the Melinda Gates Foundation, the owners.

Charlie Munger, Berkshire’s 96-year-old vice president, said in February that Chinese companies were growing stronger and faster than their American counterparts. Berkshire has investments in BYD Co, a Chinese electric car maker. The deal will also help Berkshire trim its $ 145 billion cash pile.

“Berkshire has the upper class problem of putting billions of dollars to work,” said Rosenwald of Dalton.

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