Why Warren Buffett would like to see a recession

Warren Buffett

In an interview with CNBC, Warren Buffett, chairman of Berkshire Hathaway (BRK-B), was asked about the prospect of a recession, especially as the yield curve briefly reversed last week. Buffett said, "I only hope to see a lot of recessions." Some of Berkshire Hathaway's best investments were made during times of economic turmoil. Berkshire Hathaway acquired stakes in General Electric (GE) and Goldman Sachs (GS) during the 2007-2008 economic crisis.

Pile of massive cash

According to the latest filing, Berkshire Hathaway has more than $ 100 billion in cash. Buffett surprised markets by not buying stocks aggressively in the fourth quarter. Berkshire Hathaway has reduced its stake in Apple (AAPL) and has come out of Oracle (ORCL). However, Berkshire Hathaway has added Red Hat (RHT) (IBM) to its portfolio.

In his 2018 annual letter, Buffett said his vice president, Charlie Munger, "is hoping for an elephant-sized acquisition." However, Buffett admitted that the acquisitions were not cheap. A severe economic slowdown could offer Buffett acquisition opportunities at reasonable prices. He could also consider stocks like Apple if prices fall.

Major acquisition

Recently, Buffett said in an interview that Berkshire Hathaway was considering an acquisition in the fourth quarter. However, the agreement did not succeed. Recognized for its valuable investments, Buffett expects a significant acquisition since Berkshire Hathaway acquired Precision Castparts in 2016. The company supplies components to aircraft manufacturers such as Boeing (BA).

Buffett, who had a bullish view of the airline industry, reportedly acquired Southwest Airlines (LUV). To learn more, read the evolution of Warren Buffett's investment philosophy.