The extensive tariffs implemented by President Donald Trump caused considerable disruption in the stock market. The Dow Jones Industrial Average plummeted by nearly 1,680 points on April 3, marking the stock market’s worst performance since 2020. Investors appeared taken aback by both the scale of the tariffs and the methods of their calculation, leading to confusion about their potential implications for the overall economy.
This upheaval may prompt investors to consider whether it’s wiser to remain in cash during these unstable times. While that isn’t a bad strategy, there is one stock that stands out as a safe investment amidst the uncertainty—and it remains unmatched.
A move toward safety
Trump’s extensive and heavy tariffs are likely to affect nearly every sector, primarily because they could impact the U.S. gross domestic product (GDP). Carl Weinberg, the chief economist at High Frequency Economics, noted in a research memo that U.S. GDP might contract by 10% in the current quarter. He estimates that these tariffs could reduce U.S. household real incomes or corporate profits by $741 billion. Economists at JPMorgan Chase have described these tariffs as the largest tax increase on consumers since 1968.
So, where should you invest when the consumer’s struggles seem inevitable and no sector appears safe? Simple: consider directing your funds into the hands of Warren Buffett by investing in his company, Berkshire Hathaway (BRK.A -6.74%) (BRK.B -6.89%). As one of the largest conglomerates globally, Berkshire is led by arguably the world’s best investor, Buffett, who has trained a highly competent investment team. This year, Berkshire has emerged as a safe haven in the market.
Data by YCharts.
Berkshire has not just outperformed the broader market; it has also held its ground alongside gold (represented by the SPDR Gold Shares ETF (NYSEMKT: GLD)), which is often considered a safer investment during uncertain times and has experienced significant growth. There are numerous reasons to invest in Berkshire Hathaway. The firm is exceptionally secure, boasting a remarkable cash position exceeding $330 billion across cash, cash equivalents, and short-term U.S. Treasury bills.
Berkshire operates across several industries, with around 48% of its 2024 revenue coming from insurance premiums or investment income from insurance, allowing the company to take premium floats and invest them in cash, stocks, and other financial opportunities. Berkshire is also renowned for its $274 billion equities portfolio, which includes major stocks such as Apple, Bank of America, Coca-Cola, and many more. Additionally, it has other significant revenue sources from the Burlington Santa Fe Railroad, its energy assets, and various controlled businesses spanning manufacturing, servicing, and retail sectors.
As previously mentioned, Berkshire benefits from a seasoned management team adept at navigating the economic cycle. Last year, many questioned why Berkshire opted to sell stocks and accumulate cash during a bullish market. However, those decisions now appear profoundly wise and forward-thinking.
Set it and forget it
If you’re tuned in to the stock market, you’re likely aware that Buffett and Berkshire have been consistent winners for decades. From 1965 to 2024, Berkshire’s stock achieved compound annual returns of 19.9%, significantly higher than the broader market’s 10.4%, including dividends.
It’s important to note that Berkshire won’t yield rapid gains like some of the soaring artificial intelligence stocks during a bull market. However, it is a company designed to endure and prosper over the long haul. One of the reasons for Berkshire’s success is its ability to weather many significant market downturns throughout history.
Additionally, Berkshire is equipped with a substantial cash reserve to take advantage of promising opportunities. It made numerous successful investments after the Great Recession of 2008. Even in challenging market environments, investors can purchase Berkshire stock, hold it, and forget about it.
Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, and JPMorgan Chase. The Motley Fool has a disclosure policy.
