Buffett bought more shares of IBM

Now the information has been disclosed, which is consistent with what I had expected: In the third quarter, Buffett's Berkshire Hathaway holding company bought 304,034 additional shares of IBM.  That brings the company's total stake to about 70.5 million shares… worth approximately $13 billion, or 7% of IBM. This is Berkshire's fourth-largest position. Remember what I said just a few weeks ago? Here it is: Do you think Buffett would be really sad for a minute about this "huge paper loss"? Not a chance! On the contrary, Buffett would be very happy for 2 reasons: I won't be surprised to see his increase of his holdings for IBM and/or KO in his next investment disclosure as it is typical Buffett that he loves lower stock prices and will buy more when others run away. Also he will be happy to see more shares that his dividends from IBM and KO could buy, which in the long run will substantially increase more of his wealth than if the stock prices simply go up.

 Buffett definitely keeps his words. In his 2014 annual letter, he made a wish that IBM’s stock will not go up for years: “If you are going to be a net buyer of stocks in the future, either directly with your own money or indirectly (through your ownership of a company that is repurchasing shares), you are hurt when stocks rise. You benefit when stocks swoon.”

 20 years ago, IBM successfully transformed itself from the world largest hardware company to a specialized software & IT service company. Since then its profit margin has consistently increased year over year and along with that, its annual dividend has increased more than 600% in the past 10 years from $0.7 to $4.4 today. So let me ask you, if you save your money in the bank, can you expect to earn your interest with an annual increase of 60%? Not a tiny bit of chance! On the contrary, you must know that your money buying power in the past 10 years has actually significantly reduced, thanks to inflation. That’s why to me, buying and holding IBM stocks is much better than saving in the bank. Your money will definitely beat inflation!!