Blake Hampton

Look at how much fixed-income Buffett currently owns, I believe the treasury markets are asking for it. The problem to me lies in the fact that every other asset market is underpinned by treasuries, particularly real estate through mortgage financing.

Buffett’s ability to continue holding onto a stock is simply incredible to me. Even though he talks against market timing, it almost seems that he is incredibly good at it. I’ve read about how people consider him holding KO past the late 90s being a mistake, but I imagine this trait has done him far more good over the years than bad. I just don’t understand it. When does Buffett truly decide it’s time to sell?

Found this article written by an economist at the FED, I thought it was really good: End of an era: The coming long-run slowdown in corporate profit growth and stock returns

I’m kinda surprised Buffett still owns as much Apple as he currently does, it seems crazy expensive to me. I know it’s a great business, arguably the best, but 36x earnings for a $3.4 trillion enterprise with consistently negative earnings growth seems like a hell of a lot. This is on top of historically low corporate taxes and interest expenses. edit: I would also add that Apple practices some funny tax avoidance schemes that I don’t know how to feel about. I understand though that they’re not alone.

I finally have a free day and I’m sitting down trying to decide what I should do with it. I’m curious what specific activities you all try to fill your time with, so that I can possibly garner some fresh ideas. If you want to list the respective percentages of your total time alongside the activity, that would be great. Thanks.

I don’t see how anyone rationally minded could currently think that we’re not in an everything bubble. All of these asset classes, and I’m speaking on overall valuation metrics, seem completely detached from their fundamentals. Equities, fixed income, real estate, all bubbles. The last two sizable crisises, being 2008 and 2020, were almost certainly Great Depression levels events. Our asses were only saved due to massive amounts of government bailouts and stimulus. To me, the question then is when does this dynamic fail? The governemnt can keep bailing us out until they can’t, what then? Huge deficit spending is happening, with it being almost entirely financed on the short end of the treasury curve. The government is essentially printing cash to fund their spending. This isn’t even mentioning how both candidates are floating more tax cuts and not addressing the issue whatsoever. What happens when inflation finally arrives and in turn, interest rates have to go up? What effect does this have on markets? I do not feel good about the future.

I bought a relatively large stake in OXY yesterday. Some of my reasons: - High possibility of future inflation, with energy being a good hedge - 70% of their reserves are developed which means that the cash flow is quite a bit higher than their reported earnings - Current geopolitical conflicts and domestic perception of oil will only make the liquid gold more valuable IMO. I do not believe that the transition away from fossil fuels will be as easy as some make it out to be. - Their drilling style allows for quick changes in how much they want to produce. They can increase or decrease production quickly in response to price fluctuations. Volatility in the price of oil might be beneficial for them. ^ These are just a couple of my reasons but the math works for how much they are currently selling for.

China needs us just as much as we need them. A war would be disastrous for us both, as well as for the rest of the world. I kinda agree with Xi on some of his thinking. He thinks that an economy driven on consumption is frivolous, and drives China towards a position of manufacturing and production. Ironically, the problem with this is still consumption. If your own people won’t buy the goods, you must then export them, which China does to a HUGE extent. Any impact on their consumers could have a similar ripple effect on their own economy.

This is interesting. Why do you think this causes an inverse correlation with the savings rate?

I’m sure there’s still value, it’s just interesting to me that we’re currently seeing a record amount of money placed in stocks. I think people are certainly better off just buying an index fund and sitting on it forever, but I don’t know how common that behavior is.

“U.S. households’ stock allocations have steadily inched up this year, according to JPMorgan estimates, and recently accounted for around 42% of their total financial assets. That is the most on record in data going back to 1952.” Source: WSJ - Americans Are Really, Really Bullish on Stocks People at work were recently telling me how it’s a huge mistake to not be completely invested.

I've searched but I can't find much cash flow data for the S&P

People who know what they’re doing aren’t the ones who worry me. I’m curious, how do you feel about it?

I feel like the problem is it makes earnings a useless figure now for valuing anything. If earnings are warped year to year by market fluctuations, you might just cause a bunch of ignorant people to buy or sell things using the justification of low or high P/E ratios. Operating earnings are far more representative of how an actual business is performing. I completely agree with Buffett. I also think that you could see a situation where rising stock prices create a perpetual growth in earnings, furthering price increases. Eventually this might lead to a bubble fueled by “fake” earnings.

The rule is called ASU 2016-01 and it became effective on December 15, 2017, which was also about the same time the corporate tax rate dropped from 35% to 21%. Buffett has written about the accounting change a bit over the last few years in his annual letter to shareholders.