Warren Buffett's greatest GFC investments, what can we learn?

Warren Buffett, chairman and CEO of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), is one of history's most successful investors.

His approach has allowed him to amass a personal fortune worth billions of dollars.

And many of those who have put their trust and cash in Mr Buffett's capable hands have become incredibly wealthy.

Like most other shares, Berkshire Hathaway shares have suffered as markets have nosedived, shedding about 7% of their value last Friday.

It's unlikely Warren Buffett will be losing sleep over the current downturn though.

History repeats

He's seen it all before.

And he knows how to take advantage when shares are going cheap.

In times like these, studying Mr Buffett's previous purchases during downturns could pay handsomely.

Let's look at three investments Mr Buffett made after markets crashed. Two were during the Global Financial Crisis (GFC), and one was a few years later.

General Electric (NYSE: GE)

In 2008, amid the GFC, the General Electric share price shed more than 30% of its value.

Around that time, Buffett's Berkshire Hathaway invested $3 billion in the multinational conglomerate.

It would prove to be an incredibly fruitful deal for Berkshire Hathaway and its shareholders.

By 2018, Buffett could claim that his $3 billion investment had provided a profit of about $1.5 billion, representing a 50% return.  

Goldman Sachs (NYSE: GS)

In September 2008, also amid the GFC, shortly before his investment in General Electric, Buffett's Berkshire Hathaway acquired a 10% stake in Goldman Sachs.

At that time, shares in the bank were trading at around USD$150.

When Berkshire Hathaway sold its stake at the start of the pandemic in 2020, it collected a profit of around USD$3 billion.

Bank of America (NYSE: BAC)

A few years after the start of the GFC, another financial crisis rattled markets.

Concerns about the level of the US government's spending led to the US debt ceiling crisis.

The Bank of America share price took a hit.

At the start of 2011, Bank of America shares were trading at around $14.

By the end of the year, the bank's share price had plummeted, losing more than 50% of its value.

Amid the steep declines, Buffett saw an opportunity.

Berkshire Hathaway pumped $5 billion into the ailing bank and continued to increase its holdings over the years.

Towards the end of last year, reports of Berkshire Hathaway reducing its stake in Bank of America began to emerge.

In October 2024, it was reported that Berkshire Hathaway had downsized its position in Bank of America by 26%.

Around that time, Bank of America shares were changing hands for more than $40 each.

Clearly, Buffett knows not only when to buy but also when to sell.

The post Warren Buffett's greatest GFC investments, what can we learn? appeared first on The Motley Fool Australia.

Bank of America is an advertising partner of Motley Fool Money. Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bank of America, Berkshire Hathaway, and Goldman Sachs Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended GE Aerospace. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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