Eldad

Haha yeah well I guess the earnings are now 20x but for how much longer? 3 & 6 month treasuries may go to 50x earnings in the next 3 months or so and then back to 100x soon after that. But like Charlie says “maybe” is the correct answer.

If this continues to get worse it’s going to be a little awkward when he does his America will be fine interview with Becky.

Schwab outages are extremely frustrating. interactive brokers is working but cash is in schwab.

I mean at this point what Buffett says he cares about or why he does or doesn’t do things may not be reliable. There has been a very high level of hypocrisy lately as it relates to the Berkshire financial maxims.

Can’t help but wonder if Charlie would have tried to veto this. I think he probably would have if WB doesn’t have reason besides it’s too big and expensive.

The old man is an enigma for sure.

The buyback magic probably already happened on Apple and there is no way to predicts it’s durability like a KO or BNSF.

It’s getting pretty bad out there. Maybe it’s about to get a little fun who knows.

AME just a little, still too expensive

Haha yes. The difference is probably at the super elite level and obviously depends on the person. Is your goal world domination or a fairly big fish in a small pond. Ivy League still clearly has the edge for the right type of person looking for world domination.

I went to an expensive east coast school and then moved back to my somewhat small, backward, good ole boy state. My college buddies mainly live in big cities and have large incomes but are not wealthy for the most part. My high school buddies all went to the state school and are fraternity brothers with a member of every wealthy family in every town in the state. I would say their network has yielded more fruit and many of them have used it to become actually wealthy. Just another perspective. I will be encouraging my kids to pick the state school with a full ride.

Capital Heavy can still outperform if it has a higher growth rate. All that matters is growth and return. But Cap heavy has so many disadvantages they are likely to give it all back over time to a slow and steady cap light IMO.

This is correct. Sorry didn’t see.

Should be $60 in capex and $15 in FCF for CapHeavy after year 2.

CapHeavy raises $200 in capital. It makes a 25% return on capital. Year 1 it makes $50. It thinks it can grow earnings in year 2 to $75. In order to do this it must spend the entire $50 in retained earnings on new PP&E and borrow another $50 ($300 in total capital to get to $75) Also it’s equipment it bought in year 1 will start to require maintenance capex soon. FCF = 0 CapLight raises $100 and makes 50%. It makes $50 the first year and thinks it can make $75 in year 2. It must invest all $50 retained earnings to get to $75 but it doesn’t have to borrow money like cap heavy. FCF = 0 Year 3 $90 in earnings for both. Cap Heavy needs to reinvest $65 FCF= $10 Cap Light needs to reinvest $30 FCF = $45 That basically goes on into infinity with Cap Light destroying Cap Heavy. Get out a spreadsheet, it is painfully obvious.

Capital heavy can’t grow without ever increasing PP&E, capital light can. That is why your scenario is impossible. In order to grow it would have to spend on capex lowering free flow. Also, Capital light can turn off fixed costs in a recession, capital heavy can’t. See Charlie Munger talking about his friend that had to keep putting all of his profits into new cranes or dump trucks or whatever it was.

Here we sit at $440 4 years later which is amazing when you think about it.

Yeah would be cool if his stocks looked more like SPY plus float plus buybacks he could outperform on autopilot.

True. It would be really cool to know exactly what happened and exactly what they were thinking at certain times. I’m just doing arithmetic and he is doing calculus. I got lucky by not having the analysis paralysis that he was probably dealing with.

Yes. Part of my frustration was being mostly educated on markets by him and having most of my money in BRK and buying a lot more in the 160s being extremely confident he would make out like a bandit. 73Red is going to die on the hill of it was not a mistake even in hindsight. Ok, agree to disagree.

Yeah he sold airlines which was smart. No one can predict the exact bottom. When the market is obviously panicking you dip your toe in the water IMO especially if you have been complaining about opportunities to deploy capital for many years prior. Clearly it was a mistake and clearly it was out of character. I think we can all agree on that.

He always talks about buying his 1st stock during WW2 when it looked like the Axis was going to win. 60 MM died world wide in the war. Imagine the death toll if Axis had gone on unchecked for a longer period of time. We needed that WB in 2020.

I mean Spanish Flu, Third Plague, Russian Plague, etc all with much more limited science. The world continued and prospered. It was clear at the time that if they were going to partially shut the world down they would have to print an unheard of amount of money. I’m sure this would have been clear to Warren and Charlie as well. That is why it kind of seemed like a lack of effort or just old dudes being scared and stubborn to me.

You can never know. They didn’t know in 09. Warren presents himself as a very optimistic person. Is GOOGL with a giant net cash position going out of business? Probably not maybe I should finally get some $50. I am not saying go all in, but being net sellers?

Whatever day that was in March right before the Fed started buying corporate bonds, I looked at my computer and every stock in the market was down 10%+ on the day. I know that is somewhat scary for most, but I expect Charlie and Warren to be rational and pick something up in that scenario.