Warren Buffett, the “Oracle of Omaha,” is a certified genius when it comes to investing. His investment firm, Berkshire Hathaway, founded in 1965, has increased in value nearly 3,500,000 percent.
In other words, Buffett’s investing acumen has led to “a compound annual gain of roughly 20.1%. During the same period, the S&P 500 has gained 30,209% including dividends, for an annual gain of 10.5%.”
I think it is safe to say, given his investment record, that Warren Buffett understands macroeconomic trends, the intricacies of the market, and the consequences of government economic policies to a great extent.
Therefore, I also think it is worthwhile to watch what Buffett is doing in terms of his investments, especially as the U.S. economy continues to sputter along and everyday Americans continue to struggle to make ends meet. By viewing Buffett’s investments, we can surmise where he thinks the U.S. economy is headed and which companies he thinks will benefit in the future.
Late last month, Berkshire Hathaway purchased $123 million worth of shares in Occidental Petroleum. Even more interesting, over the past 18 months, Buffett has bought $13 billion worth of Occidental shares, bringing his total investment in the oil-producing giant to more than 25 percent.
Buffett has also been busy gobbling up shares of oil-producer Chevron. Berkshire Hathaway currently holds close to $26 billion in Chevron stock.
At his recent annual meeting, Buffett made it clear that he thinks oil production remains central to U.S. prosperity. “In the United States, we’re lucky to have the ability to produce the kind of oil we’ve got from shale,” he said. He also declared, “We do not think it’s un-American to be producing oil,” and vowed, “We will make rational decisions” in reference to fossil fuel investment.
Moreover, Buffett seems to be suspicious of environmental, social, and governance (ESG) investing, which seeks to divest in fossil fuel companies while promoting nebulous social justice causes, even when these efforts reduce returns for investors.
In fact, Buffett has referred to ESG as “asinine,” and believes it belies Berkshire Hathaway’s sole purpose: increasing returns for clients.
Generally, Buffett opposes ESG because he subscribes to the time-tested view that the primary and overriding objective of any company should be to increase profits.
As he recently said, “This is the shareholders’ money. Many corporate managers deplore governmental allocation of the taxpayers’ dollar, but embrace enthusiastically their own allocation of the shareholder’s dollar.”
However, he also is on record saying that he believes ESG’s obsession with fossil fuel divestment is a misguided decision that will hinder economic development, particularly in the nations where affordable and reliable energy is most needed.
To be fair, Buffett does hold vast investments in so-called green energy companies. Yet, even he has admitted he invests in green energy because of government intervention, not because it is a sound investment. “On wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit,” Buffett admits.
And, to be clear, Warren Buffett is not a conservative, nor a Republican. He is a longtime Democrat.
But, like so many on the left these days, Buffett believes in some ways, like when it comes to climate change, that many on the left, particularly those on the far-left, have gone too far.
Buffett describes progressives pushing ESG as “unrealistic visionaries desiring an instantly new world.”
Make no mistake, his assessment of these people, from Larry Fink to Janet Yellen, is perfectly fitting.
Fortunately, especially for those invested in Berkshire Hathaway, Warren Buffett sees through the sham that is ESG better than an X-Ray machine sees through luggage. I hope Buffett’s example encourages other prominent investors to come forward and truly speak their mind about the perils of ESG.
But, most importantly, I hope they follow Buffett and put their money where their mouth is by investing in the backbone of the U.S. economy (fossil fuel companies) while pursuing profits and investment returns over leftist pet projects and their assorted social justice causes.
Chris Talgo (firstname.lastname@example.org) is editorial director at The Heartland Institute.
Originally published by RedState. Republished with permission.
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