Buffett and Munger's Investment Ideas for 2023

Last weekend, the annual general meeting (AGM) of Berkshire Hathaway took place, and as customary, Buffett and Munger spent the entire day responding to queries from shareholders.

My attention will be directed towards the actionable insights for investors based on Buffett's remarks, regarding what and where to invest.

#1 Take some profits

Buffett warned, "the majority of our businesses will report lower earnings this year than last year."

His words were mirrored in the company's actions.

During the first quarter of 2023, Berkshire Hathaway sold off stocks worth $13.3 billion and only bought $2.9 billion worth, resulting in a net sale of equities worth $10.4 billion.

Even though Chevron (CVX) was recording record profits, Berkshire Hathaway still sold off $6 billion worth of its stock, indicating a move to lock in profits before any potential bearishness sets in.

#2 Hold some cash

Following the share sales, Berkshire's cash reserves now stand at US$130.6 billion, which is higher than the US$128.6 billion it held at the end of 2022.

While Berkshire's substantial cash position is not unprecedented, investors may want to consider maintaining a portion of cash as an opportunity fund should better deals emerge in the market in the future.

#3 Buy Berkshire Hathaway

This year, Berkshire Hathaway repurchased over $1.8 billion worth of its own stock. This move indicates that Buffett perceives the company's true value to be greater than its current market valuation.

#4 Buy Japan stocks

Buffett made a rare visit to Japan and is currently searching for more investment opportunities after adding positions in several Japanese trading houses, including Mitsubishi (TSE:8058), Mitsui (TSE:8031), Itochu (TSE:8001), Marubeni (TSE:8002), and Sumitomo (TSE:8053).

#5 Hold Apple

Buffett quipped, “our criteria for Apple was different than the other businesses we own —It just happens to be better business than any we own."

He added, “Apple has a position with consumers where they’re paying 1,500 bucks or whatever it may be for a phone. And the same people pay $35,000 for having a second car, and [if] they had to give up a second car or give up their iPhone, they give up their second car. I mean, it’s an extraordinary product."

Apple (AAPL) remains the best business to own in his view.

Identifying promising investments is undoubtedly important, but knowing what to avoid is equally crucial. Here, we will shift our focus to a list of investments that should be avoided.

#6 Avoid banks

Buffett was disappointed with the way banks were managed and was not surprised by the recent banking crisis, given the excessive risk-taking and deceptive accounting practices.