Berkshire Hathaway nearly doubled its stake in Lennar since July. Lennar builds houses. Houses that you cannot afford. Houses that will sit empty while private equity converts them into rental units that you also cannot afford.
The stock is slumping. Berkshire bought more. This is what actual conviction looks like. Not the thing you had when you bought three shares of a semiconductor company because a guy on Twitter said the chart looked bullish.
Lennar is the second largest homebuilder in America. Second place. Berkshire looked at the housing market, saw mortgage rates that would make your grandfather weep, watched builders get obliterated, and decided this was the time to load up on the silver medalist. The confidence required to buy the runner-up during a sector collapse should be studied in laboratories.
Long-term recovery. That's the bet. Berkshire operates on timelines measured in decades. You panic-sold your position because it dropped four percent in an afternoon. These are not the same investment philosophies. One involves buying distressed assets in temporary downturns. The other involves checking your portfolio sixteen times before lunch and stress-eating.
The housing market is struggling. Americans cannot buy homes. Builders cannot sell homes. Berkshire saw this dynamic and thought yes, perfect, let's add to the position. Meanwhile you're reading three-day price action on a homebuilder stock and trying to draw trendlines through two data points like a child connecting dots on a placemat.
Buffett's out here buying construction companies during a housing crisis while you're waiting for the perfect entry on a momentum stock that already moved. He'll be fine. Lennar will probably be fine. Your trading account will continue its long-term recovery program, which is code for bleeding out slower than before.
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