thepupil

does it matter? could be the best company in the world and it doesn't make sense that someone who's comfy with 1-2% positions has a 50%+ position.

what are the consequences of selling? what's your basis as a % of market value does it have a listed options market? are you a candidate for the numerous wealth mgt solutions for this? how many years of savings does it represent? Are we walking like "I have $20K of SaaSco and save $50K / year" or "I have $2 million of SaaSco and save $50k / year?" Why hold it? if you're not comfortable with a >50% position, then why have it?

agree on Elon complex, valuations look dumb my stupid little mutual fund trade notwithstanding. on memory, it’s tough for me to agree in that earnings have absolutely exploded and that for these to trade at “intrinsic value” assuming this only last a couple years they’d probably have to trade for like 3x earnings which isn’t really realistic for mega caps so they trade to like 8….like with hindsight Micron at $100B in 2023 was trading for 1x 2027 earnings, so with hindsight we know that it was well below its intrinsic value (unless they never earn another $1 or estimates are way off). they’re shifting to longer term contracts which one experienced person I k ow says that always marks the top of the cycle but does lengthen the period of supernormal return. in other words, they might be worth 50% or 60% less on a true PV of earning, but are we really THAT confident the supply response will destroy earnings THAT quickly. I am not. The difference in supervycle length of 1 or 2 years is like a few hundred billion of earnings. and then the leaders as you say are potentially worse businesses than before from all this, but also like no one else can muster the scale of resources like they are… I’m more in the wishy washy useless Howard marks camp “be a little cautious / don’t go all in on any one view” with that said yesterday was amazing, market down 2.5%, portfolio up 1-2%. Let’s have more of those please! One of the tensions to manage is if you think the market leadership /stuff at the top is a little optimistic, then you might be cautious on market and think everything goes down….or you could have rotation into other stuff…I just stay mostly invested / root for rotation, but obviously if it all goes down the. Hedges/cash whatever would be better. Can’t predict that. Yesterday felt more like rotation and it was glorious. Who knows what tomorrow holds. Given the degree so many invest passively, I’d think eventually everything goes down if the big stuff does.

This is probably the most lucrative thing Greg could do. Announce $5 billion allocation to SPCX. Berkshire goes down 10-20% and share repo window opens wide

+1 Berkshire needs to deploy like $40B/yr to stand still on cash, they need to deploy like $200B or so of excess cash. not even clear (yet) that Berkshire is a net buyer of stocks YTD. it's nothing.

one thing I haven't seen discussed too much is a goal of portfolio simplification. they were net sellers of $10 billion of stocks in Q1 (from Q), completely exiting 16 stocks, going from 40--->26 (quick AI search result). Would i prefer a berkshire that owns $30B or $50B or $60B of Google, researches the company well, interacts with management in a real way, learns stuff about what's goinng on in the world from that diligence/ownership to one that owns 16 meaningless stock positions managed by a mediocre market neutral financials PM that happened to charm Buffett (which is who Todd Combs was)....of course, I'd prefer that that, it's not like he sold 50 cent dollars to buy Google. now in reality that's not how it went down exactly. Todd left, he blew out of todd's portfolio...the alphabet deal came together over weekend, goldman called Berkshire and berkshire took it down. but in substance, we have a Berkshire that has a still small, but more material position in a leading business rather than a berkshire that owns a bunch of meaningless positions....even if it's not particularly "cheap" this is also marketing. you're showing that you're good for 11 figures over a weekend at a very reasonable / commercial discount. it's also not wildly off from an index like position in alphabet, not that Berkshire is direct indexing....but there's like 6 stocks that matter Apple ($70B) Amex ($47B) Coke ($30B) Japan (trading houses) ~$30B Alphabet ($30B) Energy (CVX/OXY) ~$30B

this is wild. from a U.S. attorney.

Left found guilty of fraud. Not entirely surprised but saddened by this news.

our robust and completely useless discussion here compelled me to short a bit...made some beer money shorting COST for 10 days, +11% vs mkt, yay.... sometimes you just have to touch the stove...just to feel something

Funny part is he wrote that in 1998, then a lot of those stocks had bad returns for the next decade or so….i demand a revisiting of the revisiting lol

so i get what you're saying....but if someone asked me, without having a week or a month or a year to study the business and predict what the next 10 years of COST's revenue/EBITDA growth might look like....I might just might take into account its history of 1992 to present where its bounced around from 7-11%...like we have 34 years of data. i think that data has some informative value as to the future. to be clear, i think one could make an intellectual argument as to why COST's record justifies it trading where it does or why go forward might be better/worse than past or whatever....using their superior insight/prescience/deep study of business / whatever....but this exercise is by no means completely divorced from financial data and numbers (IMO). at an extreme, if COST traded for 500x, we wouldn't just say "well it's a good business"...just like value boys would never demand a 15% FCF yield or someonthnig ridiculous from COST i think the initial #'s are a first pass or set the hurdle one must clear.....like obviously the market is saying this is a great biz w/ long duration of earnings compounding ahead of it...so as a potential owner you have to get confidence in that (using all the qualitative stuff) AND get some sense for how much you're going to get paid if you're right or lose if your wrong [this last piece i don't understand how one can do without the recent, future numbers and some range of potential future multiples] to gregmal's point, COST is actually such a consistent business that it's very easy to throw numbers in the spreadsheet and swag things... anyways...way too mcuh ink spilled for me today on a stock i've never touched. 10 yr rolling periods, 1992-2002,1993-2003 and so forth

so what do you all propose as an alternative? DCF? (P/E is a shorthand DCF) TAM based analysis (like: assume COST inevitable takes x% of y% of affluent peoples spend at z% margins, discount to present, two step DCF? no quantification of risk/reward and just own forever? educate the PE focused simpletons as to how one might frame the risk/reward of COST... to be clear, almost nothing i own has a low PE or is an operating company...i don't sort by PE to pick stocks....but i just don't understand how one wouldn't consider the price paid relative to T12, 1y fwd, 3y fwd, 5 yr fwd 10 yr fwd earnings, exit multiples, etc in thinking about a stock.

lol at the NVDA example...I mean, yes, when earnings go from $10B to $200 billion in 5 years, P/E (of any kind, trailing 1 yr, 2, yr) doesn't matter...that hardly seems relevant.

how do you know it was a mistake though? if the stock is below where you sold in 3 years and your other investments have OP'd it, was it a mistake? I mean we never really know what's a mistake. we can only act w/ information we have today. i don't think anyone here is claiming an "edge" regarding analysis of COST because of its optically high forward (and trailing) PE's. People are expressing a valid concern regarding a de-rating given it's re-rated positively for 16 years. and bulls are free to counter that when g > r justified PE is infinite and that COST above all business probably has the potential to have a g > r for a really long freaking time (probably not infinite). it's very easy and most definitely not an "edge" to avoid COST because one requires a higher earnings/FCF/whatever yield and one doesn't want to drawdown if multiples decline...or you can say "de-rating bedamned...still growing at high rate and will do so "forever" so wake me up in 20 years at high returns....(or 1,3,5 years if multiple stays flat or keeps going up)....i don't think either person possesses an "edge" regarding the biz.... is anyone really saying they have an analytical edge? or are they just expressing timidity regarding the multiple. the two are very different things.

well it's funny because you express this in terms of value boiz being complete idiots for caring anything about valuation, when from my seat you bought a high quality, growing business, and sold it somehere in the orange zone which seems like an astute and reasonable and valuation sensitive thing to do....doesn't exactly sound like you're chomping at the bit to buy in the red zone. my stylized graph of valuation risk for COST...this is my life's greatest work.