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Patience Just Beat Momentum by 22 Points
On Tuesday afternoon, Berkshire Hathaway’s Class B shares closed two cents above the record they set on May 2, 2025. It took seventeen months to earn those two cents back. Over the same seventeen months, the S&P 500 gained more than 35%.
The company changed hands in between. Greg Abel became chief executive on January 1. Warren Buffett stepped down as chairman on September 18. Then October arrived. The stock nobody was chasing started to run.
From October 2 through Tuesday, Berkshire rose about 7% while semiconductor stocks fell about 15%. That 22-percentage-point gap is the widest over any 12 trading days since early 2010. The comparison uses the main chip-stock index, the PHLX Semiconductor Index, with data back to 1994.
What Berkshire owns explains part of it. Coca-Cola and Chevron, two of its largest stock holdings, both closed at records this month. A quiet hurricane season has helped its insurers. None of it needs a data center.
The last time it looked like this. Consider the pairing: chips down at least 14% while Berkshire rose at least 7%, inside 12 trading days. It last appeared on October 3, 2001. Every earlier case fell in 1995–96 or 2000–01. In five of those six cases, chips were higher a week later. In five of six, they were lower a year out. The 2000–01 cases came during the Nasdaq’s slide toward a 78% loss. The 1995–96 cases did not. Six cases is a small sample. It is a pattern worth knowing, not a forecast.
Berkshire gets paid when the Fed hikes. Berkshire ended June with $365.5 billion in cash and Treasury bills, per its second-quarter report. A quarter-point rise in short-term rates adds roughly $914 million a year in interest on that pile, before tax. CME FedWatch puts the odds of a December hike above 80%. The market is buying the one giant company that earns more when the Fed tightens. In thirty years of watching rotations, I have learned to ask what the winner gets paid for. Here the answer is interest.
Cash and Treasury bills are one form of patience. Gold is the older one, and the louder corners of the market think Washington could force its price higher.
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The AI spenders split overnight. Meta raised the low end of its 2026 spending plan to $135 billion, keeping the top at $145 billion. Tesla cut its 2026 estimate to $20 billion from $25 billion. The two most aggressive builders read the same year differently. The money that left the chips this month had to sit somewhere, and Omaha, Berkshire’s hometown, was one answer.
The chips did bounce on Wednesday. The Nasdaq rose 1.05% as Nvidia and other chipmakers gained, and the S&P 500 now sits less than 1% from its high. One green day makes a bounce. A reversal takes longer. The test for the next three weeks is whether investors keep paying for patience once the chips stop falling.
Not everyone has left the tech trade. Some of the louder voices argue the next big move comes from Elon Musk’s push into your phone.
Where that leaves you. An S&P 500 index fund owns both sides of this split. It weights them by size, so it carries far more chip exposure than Berkshire. The quieter comparison sits closer to home. A six-month Treasury bill paid 4.35% on Wednesday, per the Treasury. That is the same instrument holding much of Berkshire’s cash. Run it on $100,000. At 4.35%, a six-month bill pays about $2,175 by April. Simple. Boring. Paid. Owning patience does not require a trip to Omaha.
Friday brings the final University of Michigan survey and S&P Global’s October business surveys. Those are the last big surveys before the Fed meets on October 27 and 28. Berkshire reports its own quarter on Saturday, November 7.
Seventeen months to earn back two cents. Three weeks for the chips to give back 15%. Patience and momentum keep different clocks.
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