Marc Rowan, the billionaire founder of one of the largest asset management firms in the world, is worried about what he’s seeing in the market.
At a time when the S&P 500 and the Nasdaq Composite are hitting one record high after another, Rowan said he now sees as much as a 35% chance of a major correction, or worse, in the near future.
And he’s not just talking about it, he’s putting his money — and that of his clients — where his mouth is. His firm, Apollo Global Management, just reported over $1 trillion in assets under management (AUM) for the first time, yet Rowan says he is preparing Apollo for a serious downturn.
Why this billionaire is bracing for a market correction
Rowan believes that despite the many economic green flags and the latest round of blockbuster earnings, the market could be derailed by “out of the box” forces such as tariffs or war-driven inflation. The longtime fund manager responsible for building Apollo Global into the behemoth it is today says that at no point in his 40-year career on Wall Street has he been more concerned about these outside factors.
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So what does this mean for investors? Well, if Rowan’s warning comes to pass, there’s one stock that has a pretty great track record of not just weathering economic storms, but taking advantage of them and coming out ahead: Berkshire Hathaway (BRKA 0.14%) (BRKB +0.11%).
Berkshire Hathaway beats the market when things turn south
During the most dramatic crashes of the past three decades, the 2000 dot-com crash and the 2008 financial crisis, Berkshire outperformed the market with its equity investments and its portfolio of insurance companies and other wide-moat businesses.
In 2000, as speculative tech stocks imploded, Berkshire actually gained almost 27%. In 2008, Berkshire took a beating but still managed to beat the market. More important, it also used the opportunity to strike lucrative deals with companies desperate for capital, and Berkshire shone in the years that followed.
That ability to play offense while everyone else is playing defense is one of Berkshire Hathaway’s biggest competitive advantages. And with nearly $400 billion in cash and short-term treasuries on the books, Berkshire is ready to play some pretty serious offense.
Berkshire Hathaway’s track record is impressive
It’s not just major crashes, either: Every calendar year since 2000 in which the S&P 500 finished in the red, Berkshire Hathaway has outperformed it, by an average of 18 percentage points. The following table spells it out.
| Year | Berkshire Hathaway | S&P 500 (Total Return) |
|---|---|---|
| 2000 | 26.6% | (9.1%) |
| 2001 | 6.5% | (11.9%) |
| 2002 | (3.8%) | (22.1%) |
| 2008 | (31.8%) | (37%) |
| 2018 | 2.8% | (4.4%) |
| 2022 | 4% | (18.1%) |
| Average | 0.7% | (17.1%) |
Data source: Berkshire Hathaway’s 2024 annual letter to shareholders.
Now, the obvious counterargument is that while Berkshire’s stock has crushed the market over the long haul, that hasn’t been true recently. Berkshire’s more conservative approach means it’s lost out on much of the growth from tech and artificial intelligence (AI), and over the past year, its stock is down 5.3% while the S&P 500 is up 25.7%.
Is now the right time to buy Berkshire stock?
But if Rowan’s concerns are validated — if rising gas prices, tariffs, or some geopolitical shock rattles investor confidence and the market pulls back — those richly valued tech stocks will drop, and drop hard. And in that moment, one of the best stocks you could hope to own would be Berkshire Hathaway.
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History is clear that Berkshire is a fantastic stock to own during a “great conflagration,” in the words of longtime chief executive Warren Buffett.
While many investors wonder if Berkshire’s new CEO, Greg Abel — who took over from Buffett on Jan. 1 — can fill Buffett’s shoes, I have confidence he can. And, in my view, that concern has shares now trading at a discount. At recent prices, the stock trades around 1.4 times book value, a level where the company has been willing to buy back its own shares. I think now is a great time to add Berkshire to your portfolio.
