At the recent Berkshire Hathaway annual meeting it sometimes felt like Warren Buffett was trying to square words with actions. The Oracle of Omaha insisted, as he always has, that the best place for retail investors to be is in an S&P500 index fund. But he also told shareholders that his company had sold 16 times as much stock as it had purchased in the last month, including dumping the entire airline asset class. And he admitted that while you could still “bet on America, you are going to have to be careful how you bet”.

When you look closely at his actions, he is still following the same strategy that he has employed throughout his career. It is an approach built on two things: first, value investing, which basically involves the forensic examination of corporate balance sheets; and, second, a belief not so much in America as in American companies and their ability to export their particular brand of capitalism abroad. Both of those pillars still hold much wisdom for investors who want to understand where markets — and the real economy — are heading.

Mr Buffett learnt the skill of value investing from his former Columbia Business School professors David Dodd and Benjamin Graham, whose book, The Intelligent Investor, he memorised. They argued that investors should buy companies that have steady profits, low price-to-earnings ratios and very little debt. Following that logic, it is no wonder that Mr Buffett isn’t buying much stock. Corporate debt doubled between Mr Buffett’s bullish buying spree after the 2008 financial crisis and the end of 2019.