LC

We've turned into a decidedly average country with a wide tailed distribution ;D ;D

ATT bought back about 5.3B in Q1 (aprox 2%)

https://www.nytimes.com/2020/05/05/us/politics/rick-bright-coronavirus-whistleblower.html We are a well functioning democracy. We are a well functioning democracy. :-X :-X :-X

No, Taleb is being cheeky in an attempt to appear smart on twitter. If you don't assume what is called a Markov process, then you are left in a much worse (and less sensible) place.

Out of respect for Greg and in the name of true journalism, I'll only be posting twitter links now :D Apparently coronavirus was present in France in December: https://www.politico.eu/article/france-looks-into-suspected-coronavirus-case-dating-back-to-december/

Maybe this is what you meant, but I think your statement is only accurate when you NEED the specific real estate for the business. A coffee shop which owns the building is more stable. A software firm that owns an office building is less safe. For lease accounting I generally think, is this necessary for the business? If this lease is cancelled, does it cause serious impairment? I mean, if a retailer gets kicked out of all its leases, that is a huge deal. Revenue is going to zero. But look at the tech companies - they've been functioning without office space for over a month now. But 99% of the time I capitalize leases regardless, essentially when you do any capitalization of earnings you are implicitly capitalizing all the associated expenses.

Yes and just for sizing purposes - it is currently a 7% position - started around 5%, went up to 10% as I bought more, now down to 7% due to market price declines and me allocating a greater % of funds elsewhere. If the price were to run up (or the rest of the portfolio were to drop dramatically in relation) I would certainly trim a fair bit to offset my cost basis, also I think I need to keep it at-or-under a 7.5% position due to the uncertainty around the core business.

I'd suggest reviewing 70 year data on resident population growth, immigration growth, unemployment rates, real GDP per capita, infant mortality rates, and average life expectancy. Maybe overlay that with qualitative factors such as access to education, access to healthcare, voter's rights, and representation by demographic group in government. You're ignoring literal mountains of evidence in favor of sentimentalism. I'd want to change the subject too, if I were arguing your position :D lc...you're dragging me back in. What does 70 year data have to do with anything? China was allowed free trade by Clinton in 2000. And through most of that time we've had artificially low interest rates and huge deficits to maintain our broken system. If I were wrong, we wouldn't have the current leadership we do now either. ;) I would further suggest some historical review of China. Chinese international economic trends began far before the year 2000. Mao's policy in the 50s-60s spurred a lot of industrialization in China at the expense of individual workers. International impact was thin during this era and you can use it to establish a baseline case for the status of the US without China as a superpower. Post-Mao in the 70s China began a market-based economic model which leveraged and exploited this foundation from Mao. Rapid, de-centralized industrialization at cost (with human and environmental externalities - the price they paid). This was a rapidly expanding era that has essentially continued to-date. If you think a pre-China world is somehow better for the US, you can take a look at the 50s-60s statistics which I have suggested as they apply to the USA, and compare them to the 70s-2020 era. In almost every case, US has progressed incredibly during the time period coinciding with China's rise to power. It is one of the poster-child examples of how the theory of comparative advantage benefits both participants. A lot of this is due to China taking over low-skill work previously done within the US. But, I understand that politically, this fact does not sit well in red states of mind. Coincidentally, when speaking of red states (of mind), you can compare/contrast the USA during this pre- and post-China era and the USA during the pre- and post-Civil war era. During the Civil war, Confederate agriculture simply could not (or actually, would not) adapt to changing times and the rise of industrial manufacturing. This gave the Union a strong economic advantage.

I'd suggest reviewing 70 year data on resident population growth, immigration growth, unemployment rates, real GDP per capita, infant mortality rates, and average life expectancy. Maybe overlay that with qualitative factors such as access to education, access to healthcare, voter's rights, and representation by demographic group in government. You're ignoring literal mountains of evidence in favor of sentimentalism. I'd want to change the subject too, if I were arguing your position :D

Sorry but eventually, Adam Smith always wins. You don't get to blame the Democrats or Republicans for a lesson as old as time itself: you can't beat change (or comparative advantage). For decades China was (and is) able to supply low cost inputs for global consumption. The entire world - including the mean (and median) US citizen and corporation - is better off as a result. Even the ones laid off when "they took our jobs".

I thought that was the Deep State. I must be getting my nameless, hidden-in-plain-sight, pseudo-government entities of Democrat carpetbaggers pulling the strings of Democracy from the confines of leather armchairs, fireplaces and Great Danes at the Bilderberg estate...confused. If you think "the Establishment" put a country of 1 billion people with a rich history of productivity, who performed incredibly cheap labor at high cost to themselves for decades, to the benefit of the western nations "in power" and their citizens - then I would argue you are ignoring factors which represent 95% of China's rise to geopolitical power, in favor of <5% of the factors which you are fitting into your narrative.

Referring to IRM? I think so because the other companies I mentioned are well covered here. Long term you are right - but I think this business and its customers are stickier than imagined. Record keeping for banks, lawyers, doctors, real estate, insurance....all the old professions... it's important and usually it's easier to keep paying the storage bill vs. finding alternatives. Some of the ancillary uses of their space (fine art storage) are interesting - and it shows me management is not sitting around doing totally nothing. They are leveraging existing customers and migrating them to digital recording and storage. There's only going to be more and more data. And a lot of these customers have been customers for years or decades. It's easier to keep paying IRM a modest fee (even as the client transitions from paper to digital) vs. an unproven incumbent. I mean, let's say Google or Amazon comes in and sells their datacenter space as a competitor. A couple of things IMHO would discourage this scenario: (1) it's simply not a sexy business, investors may see it as a sign of weakness that Google can't find any opportunities other than competing with hard drive space; (2) these tech companies are innovative but that is exactly the opposite of what a client wants. They want to make sure their records aren't the next ones to be hacked; (3) the tech co's are a bit opaque how they leverage customer data. amazon competing with 3rd party sellers, google leveraging cookie data - again, these clients do not want their data anonymized and analyzed for Bezos's or Zuck's benefit ; (4) history matters here - google may give a great deal now, but what happens in 5 years when they need to continue to show high % revenue growth and the client's annual fees are in goog's crosshair? do you pay the fee or switch to another provider? if you switch, now you have to manage millions of records being transferred, deleted, make sure nothing is corrupted, etc. etc. So ultimately as to the moat - it's a business that is large enough where scale plays a role but small and boring enough to discourage large competitors. I think the overall dynamics of the business are neutral or trending down (data is ultimately cheaper than paper), but I think it's a bit like cigarettes in that it won't ever go away. So I could be totally wrong, I think in the IRM thread I've said as much. I try not to reinvest too much here (but it looks so damn cheap - maybe I'm a sucker), but every quarter it sticks around, my cost goes down. It's a heads I win, tails I don't lose too much - at least IMHO.

bought some IRM, PM, WFC, T, and a tiny tiny position in SSD the last few trading days. At about 10% cash.

You could give the money away to a worthy charity. One such worthwhile charity is the Democratic Party :D

Bailout out the airlines without forcing them to change is essentially a transfer of wealth from the many (taxpayers) to the few (airline bondholders). Airlines will exist either way. In one case, we have subsidized profits to bondholders who are continuously bailed out and never have to change their behavior (by forcing the airline to hold more capital, pay higher rates, etc.) In the other case (which I suspect will not happen) the government either lets them fail, or saves them and forces capital regulations, as they did the banks/mortgage insurers they bailed-out in 2009.

Wow, what a contribution. Thank you!

I think the transcript is the best. You can skip the stuff you aren't interested in.

He's OK endangering lives of Minnesotans, just not his native Indianans. What a patriot. Great VP. The best.

Greg Abel gives further context later in the meeting regarding BHE, towards the end, here is the entire context: Greg, let me ask you one of these capital allocation questions. This one comes from [Matt Libel 00:03:16:53] and he says “Berkshire directed 46% of capital expenditure in 2019 to Berkshire Hathaway Energy. Can you walk us through with round numbers how you think differences in capex spending versus economic depreciation versus gap depreciation and help explain the timeframe over which we should recognize the contract of return on equity from these large investments, as we as shareholders are making in Berkshire Hathaway Energy?” Greg Abel: (03:17:22) So when we look at Berkshire Hathaway Energy and their capital programs, we try to really look at it as it was highlighted, really in a couple of different packages. One, what does it actually require to maintain the existing assets for the next 10 20 30 years i.e. it’s not incremental, it’s effectively maintaining the asset, the reflection of depreciation. And, our goal is always to clearly understand across our businesses, do we have businesses that require more than our depreciation or equal or less? And happy to say with the assets we have in place and how we’ve maintained the energy assets, we generally look at our depreciation as being more than adequate if we deploy it back into capital to maintain the asset. Now the unique thing in the lion’s share of our energy businesses that are regulated and that exceeds 85% of them, 83% of them, we still earn on that capital we deploy back into that business. So it’s not a traditional model where you’re putting it in, but you’re effectively putting it into maintain your existing earnings stream. So it’s not drastically different, but we do earn on that capital. Greg Abel: (03:18:43) But what we do spend a lot of time, and that’s what when Warren and I think about the substantial amounts of opportunities, that’s incremental capital that is truly needed within new opportunities. So it’s to build incremental wind, incremental transmission, that services the wind or other types of renewable, solar. That’s all incremental to the business and drives incremental both growth in the business. It does require capital, but it does drive growth within the energy business. So there’s really the two buckets. I think we would use a number a little bit lower than the depreciation. We’re comfortable the business can be maintained at that level and as we deploy amounts above that, we really do view that as quote incremental or growth CapEX. Warren Buffett: (03:19:33) Yeah, we have what, 40 billion or something? What do we have in sort of kind of in the works? Greg Abel: (03:19:42) So we have basically, as Warren’s highlighting 40 billion in the works of capital. That’s over the next effectively nine years, 10 year period, a little approximately half of that we would view as maintaining our assets. A little more than half of it’s truly incremental. And those are known projects we’re going to move forward with. And I would be happy to report, we probably have another thirty billion that aren’t far off of becoming real opportunities in that business. Greg Abel: (03:20:16) As Warren said, that it takes a lot of time. It’s a lot of work. The transmission projects, for example, we’re finishing in 2020, were initiated in 2008 when we bought Pacific Corp. I remember working on that transmission plan, putting it together, thinking “Six to eight years from now, we’ll, we’ll have them in operation.” 12 years later and over that period of time we earned on that capital, we have invested and then when it comes into service, we earn on the whole amount. So we’re very pleased with the opportunity, but we plant a lot of seeds, put it that way. Warren Buffett: (03:20:48) Yeah. And these are not, it’s not like they’re super high return thing, they’re decent returns over time. And we’re almost uniquely situated to deploy the capital. As opposed, you could have government entities do it too, but, but in terms of the private enterprise. And they take a long time, they earn decent returns. I’ve always said about the energy business, it’s not a way to get real rich, but it’s a way to stay real rich. Warren Buffett: (03:21:23) And we will deploy a lot of money at decent returns, not super returns. You shouldn’t earn super returns on that sort of thing. I mean, you are getting rights to do certain things that governmental authorities are authorizing and that they should protect consumers, but they also should protect people that put up the capital. And, it’s worked now for 20 years and it’s got a long runway ahead.

But scorpion, how many times has WB said he can't predict rates and does not take that into account when evaluating investment options? Holding cash would make sense if you expect deflation/negative IR. Perhaps the large cash balance is his hedge against the large lending portfolio he has (banks, insurance & bonds). It's the only rationale that seems to make sense (at least to me)

Of which year? 2017? ;D

An Indian and two Pakistanis were seated together on a plane. The Indian got a seat between two Pakistanis on the plane. Relaxing, he took his shoes off. Soon enough, he got hungry. "Hey, I'm going to get myself a snack. You guys want anything?" He asked the Pakistanis. The man to his right said he would like a Coke. "Of course." said the Indian. "After all, Indians and Pakistanis are Brothers!" When the Indian went to get the coke, the man who asked for the Coke spit in one of his shoes. Once the Indian came back, the guy to his left asked him for another Coke. He happily obliged. While he was gone, the man spit in his other shoe. Soon enough, the Indian returned, with the Coke, of course. After everyone had settled down, and the Pakistanis had had half their Cokes, the Indian put his legs in his shoes and sighed. "How long will we keep doing this, brothers? Spitting in each others shoes, pissing in each others Cokes?"

I think he pretty much said as much, either this meeting or in the interview he did prior. I also agree here, he did seem exceedingly worried. But he made it clear that he knows just as much about this virus as we all do - so perhaps he is more worried about the economic fallout vs. the virus itself? But that view doesn't make total sense either in the context of buffetteer's point #2: "2. Berkshire at 185 is now equally as valuable as at 220 a few months back therefore impairment of actual long term value of 15% more or less so far from corona. "

I found his comment on "not wanting to talk about specific scenarios - as it may increase the probability of them occurring" Very bearish tune from a person whose opinion can shift entire markets...

Yes, looks like about 2B of additional equity sales assuming he sold out of the airlines. WFC? OXY? GS?