Blake Hampton

One of the harder things for me to understand is how asset prices would react to inflation. How would the FED react? They have all these bonds on their balance sheet that they could sell, but who would buy them? How far could interest rates go up?

This is simply my broad analysis of the current market. I know of some decent things to do and I agree that there's almost always something great if you look hard enough. If you mean fundamentals that I'm basing my listed ideas on, I would look at the S&P 500 factsheet and earnings figures. If you sit and play around with those numbers for a while, you'll notice some interesting things. S&P 500 Earnings and Estimate Report.xlsx S&P 500 Factsheet.pdf

Honestly I haven’t looked at it too in-depth besides Prem’s portfolio.

I'm starting to realize investing isn't about timing crashes or tops, it's about being prepared for any possible situations in the future. Investing is definitely far more difficult than it looks. Maybe this is why bubbles happen.

I realize there's no telling with timing on this stuff, but I'm not impressed with current valuations. I'm sitting on about 70% cash and I'll list a couple of reasons for my poor outlook: Overstated figures due to unrealized capital gains being recorded as earnings High likelihood of a higher corporate tax rate in the future Large government deficits that are almost entirely financed with short-term debt, which is essentially printing cash. As I've said previously, Buffett is sitting with an approximate 50% cash position when you exclude Berkshire's non-financial assets. I'm not calling for a crash or anything, but right now seems like as good a time as any to be bearish.

^ Janet Yellen said it's her "pleasure to present the Fiscal Year 2023 Report to the American people."

2023 Financial Report of the United States Government Scary stuff

Genius

It couldn't be a lump-sum deal and it would have to gradually revert to fixed-income like a lifecycle fund, but it might be able to work. I just have a perceived problem, possibly irrational, with mindless investment that has no fixation on underlying fundamentals. Over time, indexes average out to returns that are relatively simple to forecast from the onset. Is it possible though that money could keep flowing into an index without there ever being a huge correction? What is the longest period after an index drops for it to reach all-time highs again? It is just the simple nature of fixed income vs the stock market. The income from treasuries is fixed and certain whereas the returns from stocks aren't.

Sounds to me like the foundation for a super bubble. Government mindlessly investing mass amounts of money into stocks doesn’t seem to me like a good idea, but I sort of feel the same way about index funds. Index funds though are invested on a personal basis, social security isn’t.

This is a great point. Dems and Reps are really just two sides of the same coin where they offset themselves financially with both their respective policies. Dems want to increase taxes but also want to spend, and Reps want to decrease spending but also want to decrease taxes. Really what we need is a less bipartisan congress that can actually come to an agreement on something. I guess that’s easier said than done.

One thing I’m certain of in this world is that you should listen to Buffett on financial matters. If the people in power would’ve heeded his advice in the past, we would’ve all been better off.

This whole market situation appears to me to be a tension between valuations and future inflation. Valuations seem to be crazy but when you have a government that is at 120% of debt to GDP and is spending like there is no tomorrow, it seems like cash isn’t as safe as some think. It’s interesting because if you look at Berkshire’s financial assets, it’s basically a 50/50 split between cash and equities (This is including receivables into the cash category.) I understand that Buffett has special covenants but I still think this is how he’s decided to play the current scenario. Also it's clear that he absolutely despises fixed income, with it only making up around 2% or so of those financial assets I was talking about. I mentioned this already earlier and someone who seemed to understand Berkshire quite well pointed out that even this little amount of fixed income is a requirement, meaning he might not own any if he didn’t have to.

Multiples for a lot of these businesses are simply crazy to me. 30x, 40x, 50x for little to no growth with a higher corporate tax rate looming. If the federal corporate tax rate is raised from 21% to 35%, all else held equal, that same income is now worth roughly 18% less. A company selling for 30x earnings would then be selling at 36x. I’m no investment genius but even Buffett cited this concern at his annual meeting this year. He mentioned it when pressed on his initial sale of Apple.

I also think Iran is a far more formidable enemy than the others we’ve faced in the recent past.

I personally think this is a culmination of events that will likely get worse. Still don’t think the market is at all attractively priced, not to mention that we could also be on the cusp of a nasty middle eastern war. My opinion of course doesn’t matter and I don’t know any of this for certain. I question how the U.S government’s finances could even handle a war at this point.

Buffetts about to start a recession by himself lol

WSJ says Buffett has sold half his Apple position. Sign of a top?

This could certainly be the situation if Biden is re-elected. If Trump becomes president however, companies will soon have a negative tax rate and actually receive tax revenue from the government.

This guy has some of the most informative financial content I’ve ever found: MoneyWeek MoneyContent Make sure to sort by popular since all the best uploads are kinda old

What do you think about his overall allocation between equities / bonds / cash?

Berkshire has essentially no money in long-term bonds, with the little that he does being primarily in foreign governments.

After adjusting for corporate taxes, Shiller PE is currently sitting around where it was at the peak of the tech bubble.

I don’t know what to think anymore Link - might be worth a read

You know it’s funny because I’m young, my point being that I’ve only been investing for a couple of years now. I think that if I were to have started say 10-15 years ago, I might view the current situation completely different. I’m sure that is some form of bias and I don’t know how to feel about it to be honest.