The sell-off earlier this month may or may not be over. But investors with long-term views shouldn’t really care. As long as you buy good companies for reasonable prices, everything else is noise.
If you’re looking for high-quality large-cap stocks to add to your portfolio this month, three of our Motley Fool contributors have some ideas. Here’s why you should consider Berkshire Hathaway(NYSE:BRK.B), Cisco Systems (NASDAQ:CSCO), and AT&T (NYSE:T)…
Ready to reap rewards in a market decline
Tyler Crowe (Berkshire Hathaway): Perhaps one of the most ridiculous investment takes out there right now is that Berkshire Hathaway’s immense cash pile isn’t a good thing. Sure, the value of cash deteriorates over time thanks to inflation, and Warren Buffett has admittedly said that it is way more cash than necessary to run the business effectively. That said, Berkshire Hathaway looks like an incredibly attractive large-cap stock right now that has an enviable position. It is, arguably, the company best suited to benefit from a market downturn.
There are two reasons that Berkshire’s portfolio is flush with so much cash today. One is that the company generates a stupid amount of cash each quarter (fun fact: A stupid amount is the technical term for $22 billion in free cash flow over the past 12 months) and, in this year’s letter to shareholders, Buffett lamented about how valuations made it hard to justify making too many deals today. So Berkshire’s cash pile continues to grow as a result.
If the market were to decline significantly, though, it could open up a lot of buying opportunities for Berkshire. You only need to point to its monumental purchase of Burlington Northern Santa Fe back in 2009 as an example of Buffett taking advantage of market conditions to enrich Berkshire’s shareholders. The list of people you would want to give…
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