Windsor Wealth Management

I wanted to share an update on Berkshire Hathaway, because over the last six months it has been somewhat out of favour.

When enthusiasm in markets leans strongly toward certain areas, other strong businesses can drift out of the spotlight. That is what has happened here.

It is worth recalling how differently Berkshire behaved earlier this year. In April, when the wider market pulled back by around 16 percent, Berkshire rose by approximately 4 percent. This ability to hold steady, and sometimes rise, during periods of nervousness is one of the reasons it is part of your portfolio. It is often at its most valuable when markets become uncertain.

Right now investor attention is focused on large technology companies. Many of these businesses are producing real earnings growth and innovation, so the market’s interest in them holds some justification but there will prove to be pockets of frothiness also. When attention becomes concentrated in one area, other high quality companies can appear quiet for a time. This does not mean anything is wrong. It simply reflects the short-term voting nature of markets.

That is why it is helpful to look at the fundamentals. Berkshire’s most recent results announced last Friday were strong.
• Profit increased by 17 percent compared with the same period last year.
• The company holds more than $350 billion dollars in cash and short-term bills. To put this into context Berkshire Hathaway holds more cash than any company in the world, and there are only 30 companies in the world with a larger market value.
• Insurance operations performed well, particularly GEICO, which posted meaningful underwriting profits.
• Manufacturing, service and retail businesses showed steady growth.
• BNSF Railway continued to improve operations and pricing discipline.
• The only area under pressure was the energy division due to previously known wildfire-related costs. There was no new negative development.

The most important strategic feature remains the large cash position. This provides flexibility. If markets correct or valuations fall in certain areas, Berkshire has the ability to buy high quality assets at more attractive prices or repurchase its own shares when they represent value. It can act from a position of strength rather than reacting out of necessity. This patience has served it well historically.

Berkshire does not need to be the best performer in every phase of the market to earn its place. It is held to reduce downside risk, to provide resilience, and to compound steadily over time. For most clients, an allocation of roughly 10% to 35% of their portfolio remains sensible.

Overall, the fundamentals are strong, the business remains disciplined and the cash position provides optionality as well as emotional reassurance for investors. Berkshire continues to play the role it is meant to play.

Here is a 6 month chart and a 30 year chart of Berkshire’s share price performance. You choose which is more important!!

You’ve probably noticed news of financial market volatility, so I want to share my thoughts on what’s happening, what we expect to happen, and what you should do.

1. What’s Been Happening in the Markets Over the Last Month:

Financial news has hit the headlines, putting a spotlight on market volatility. The S&P 500 has dropped 8% in the last month, the Nasdaq 11.1%, and the NZX 50 reflects similar global and local pressures.

Trump’s tariffs—25% on Canadian and Mexican imports, 20% on Chinese goods, with threats of 200% on European alcohol—plus Ukraine-Russia tensions, are fuelling uncertainty. Businesses face tariffs shifting almost daily, like Mexico’s one-month delay, complicating investment and cost planning. Most top 500 U.S. companies warn these will squeeze earnings, and markets are factoring in lower profits and a potential slowdown.

Meanwhile, U.S. cost-cutting via the Department of Government Efficiency (DOGE) is hitting the public sector, adding economic and share market strain.

2. What We Expect to Happen to Markets Next:

Looking ahead, it’s easy to see a path of markets taking another step lower, but there’s also a chance of a rebound.

Tariffs, DOGE cuts, and geopolitical risks could weigh on earnings, and confidence. However, markets price forward—today’s news is baked in—so the next shift depends on how reality compares to expectations.

If the economy weakens more than anticipated, like US GDP dipping below 1%, share prices would likely drop. If the slowdown’s less severe, a bounce is possible. In the short term, psychology drives swings—many investors treat shares like a horse race, betting on ups and downs in individual companies. But as a real investor, you’re an owner of businesses, holding a piece of company profits, not just a wager on price moves.

Consider large companies such as Amazon or Uber: down heavily this month, yet their earnings in 5 or 10 years are unaffected by current newsflow. Buyers can buy a slice of the same future profits at a cheaper price than a month ago. Watchful buyers may step in at these levels. If not they will leap in at lower levels..

The next leg—lower or higher—rests on new developments: tariff updates, economic data (e.g., U.S. GDP April 24, CPI April 9), or April earnings results. Better-or-worse-than-expected outcomes will set the direction.

Also we are only talking about the US so far. While they are cutting government spending, there are countries in Europe such as Germany who are increasing government spending and likely to see an economic boost.

3. What Should You Do:

If you are a long term investor and not invested in concentrated bets, it is best to do nothing. If we tried to adjust our investments for adverse newsflow we would get it wrong more often than not, and the diversified portfolios we recommend will perform extremely well over the longer term.

During COVID, markets crashed 30% as economies froze—many expected another 20% drop amid business failures and job losses, but there are always reactions and interventions to market crises.

With the COVID crash the reaction was interest rates plunged, governments borrowed heavily, property markets became buoyant, and that 30% dip became a buying opportunity, not a sell signal, despite grim headlines.

Today, worsening news could shift fast—tariffs might resolve, rates could drop. Markets often defy certainty.

Our defensive philosophy at Windsor Wealth NZ focuses on resilience—funds and companies that are easier to hold through real crashes, because although we expect the market to be much higher in 20 years, we expect about 3 crashes along the way.

• Evidence-based funds give you a stake in thousands of companies, favouring cheaper, profitable ones with less froth, more margin of safety.

• Berkshire Hathaway is actually up 7% this month, buoyed by safety-seeking investors, and a huge cash pile ready to snap up bargains if the markets head south.

• Active managers we back have already been cautious leading into this volatility, increasing investment in Europe, and currently keeping a watchful eye out for bargains in US, but not jumping yet.

We will keep an eye on upcoming economic data releases and earnings reports in the next 6 weeks, that will have an impact, and report back to you, and until then remember that there is always something for markets to contend with, yet they find a way