Berkshire Hathaway (BRK-A, BRK-B) CEO Warren Buffett, the 91-year-old Oracle of Investing, has seen just about every type of market.
In 1999, at the height of the internet bubble, Buffett warned that investors expected unrealistic returns. In October 2008, the immediate aftermath of the worst financial crisis since the Great Depression, Buffett dismissed concerns about “the long-term prosperity of the nation’s many sound companies.”
In turn, Buffett has a phrase that captures exactly what the market is experiencing right now, says venture capitalist Adam Dell, the founder and CEO of a new investing platform called Domain Money. Despite ups and downs in the market, its prospects remain bullish in the long run, especially for tech and cryptocurrencies, Dell said.
“Market volatility is one of the things that is inherent in our market,” says Dell, who spoke to Yahoo Finance on Jan. 25, well before the Federal Reserve raised its benchmark interest rate on Wednesday. “Whenever you have such a large inflow of capital into a discrete number of assets, you’re going to have significant swings.”
“As Warren Buffett likes to say, ‘The market is a voting machine in the short term and a weighing machine in the long term,” adds Dell, the brother of Dell (DELL) CEO Michael Dell.
The three major indexes have climbed in recent days since the Federal Reserve announced a 0.25% hike of its benchmark interest rate. But each has fallen at least 5% since the outset of this year, a rocky start to 2020 that has seen volatility befall markets amid persistent inflation and lingering COVID-19 disruptions.
In early trading on Friday morning, the Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) fell slightly while the Nasdaq (^IXIC) ticked up.
Since 1965, Buffett has built textile company Berkshire Hathaway into a giant holding company, along the way popularizing the strategy of “value investing,” which identifies stocks trading at a price lower than their book value, and patiently waits for them to rise.
Late last month, Berkshire Hathaway reported almost $90 billion in profit over the course of 2021. In his annual letter to shareholders, Buffett pointed to “four giants” that have driven the company’s success: its insurance operations, BNSF, Berkshire Hathaway Energy and its stake in Apple.
Dell, who departed Goldman Sachs last year after leading its online-only bank Marcus, echoed Buffett’s signature long-term focus as he highlighted promising trends in tech and cryptocurrency.
“As I look at the long term trends, some of the free cash flow sources that are being spit out of some of the larger tech names, I’m quite bullish on their prospects going forward,” he says.
“As it relates to cryptocurrencies, where we’re focused, I look at the fundamental underlying components of blockchain technologies and their contribution to our financial markets,” he adds.