james22

Buffett’s Berkshire Hathaway to invest $10 billion in Occidental Petroleum for Anadarko takeover https://www.cnbc.com/2019/04/30/buffetts-berkshire-hathaway-to-invest-10-billion-in-occidental-petroleum-for-anadarko-takeover.html $90B to go.

I guess I do too, as long as I'm buying shares. And/or Buffett is buying shares back. But at some point I'll be looking for share appreciation. And it's a little dishonest of Buffett unless he believes it. He is otherwise misleading shareholders as to Berkshire's prospects when he offers to buy their shares back.

But this is a value forum - shouldn't he be valuation timing it? Shifting away from any equities relative to their expected return? Are your equities indexed or in individual stocks, Eric? If the former, I'd make the switch today (believing the market overvalued and so the expected return not enough greater than bonds to justify the risk). If the latter, you might shift away first those with the least expected return.

It is Buffett playing avuncular, at his investor's expense. And it should be taken as inconsistent with his belief that's he taking advantage of a partner if he buys them out. I really look forward to his successor arguing BRK expects to outperform the S&P 500, without fear of being immodest.

Vanguard announced a couple weeks ago they'll be launching their CCF fund in June. https://pressroom.vanguard.com/news/Press-Release-VG-Announces-Plans-to-Launch-Commodities-Fund-04-04-19.html I've carved out 5% waiting for it.

Yeah, seems turning into Loews (run more for the benefit of the Tisch family than shareholders).

Nice, thanks.

BRK bought back $1.2B from an individual's estate in 2012. I don't remember anyone questioning the mutually beneficial logic then.

I don't doubt that BRK and BAM/OAK will fall with the expected larger correction. But believing they'll come out of it strenghened allows me to be more fully invested at a time of overvaluation than I otherwise would be. They hedge against the possibility of there being no correction too, of course.

Or go "anti-fragile" (BRK, BAM/OAK, etc.).

I do believe the market's expected return is very low, but it's how we get to no returns after a decade or two that matters. (I expect the market will correct by ~50% again before then.)

I use VEMAX (and VSIAX) because they are available in my 401k. I'd otherwise probably tilt my EM to Small and Value if I could. If had DFA access: DEMSX and DFEVX http://www.altruistfa.com/dfavanguard.htm Otherwise: https://www.bogleheads.org/forum/viewtopic.php?t=208687

More BRK.B @ $199

BRK.B @ $199

For EM (and SV) exposure, I use funds.

DIng, ding, ding.

Maybe a barbell strategy? Something like Swedroe's suggested 15% Small Value, 10% International Small Value, 5% Emerging Market Value, and 70% 1-year Treasuries would give you an expected return equal to that of the S&P 500.

Index fund's diversification is arguably the only free lunch in finance, reducing risk without reducing reward. If you've given up value investing (and a margin of safety), not sure how you'll avoid the problem of buying and seeing an investment tank 50% without reducing your expected reward at the same time.

One can always consider valuation when investing with index funds, you know.

These have been especially difficult years for value investors given QE. I'd be very leery of shifting to a Boglehead buy-and-hold index strategy at a time of QT.

Perhaps a couple broader lessons I've learned: first, to try to do a better job of overcoming my natural aversion to ideas that are popular. For example, Interactive Brokers (IBKR) has been a perennial favorite among small-cap investors focused on quality businesses, and in retrospect, I probably should've been more open to the idea several years ago. One of the mental blocks for me was - "if everyone loves this so much, how can it still be a great value?" (No position now or previously.) Going forward, I'm trying to do a better job of focusing more on an idea's merits and tuning out who likes or doesn't like it. Second, and similarly, I've realized that it's internally inconsistent to A) believe that I have no edge in interpreting near-term price action, and B) prefer buying securities that have fallen over the near to medium-term past than securities that have skyrocketed. Although a large portion of my gains are undoubtedly due to averaging down, I've also found that averaging up can be profitable if the fundamentals are improving faster than the valuation. Similarly, some of my worst picks have been companies whose share prices have fallen dramatically, while some of my good ones have been companies whose share prices had risen meaningfully. As with the previous item, I'm now trying to focus more on the "signal" - i.e. the idea's fundamental merits - and less on the "noise" - i.e. whether it's recently up, down, or sideways. https://seekingalpha.com/article/4229722-small-cap-bear-next Both of these ring very true.

I like Uncle John's take: 1. Greenspan, Bernanke, and, in particular, Yellen all gave the markets a “put” option—basically a third unofficial mandate to make sure that asset prices keep rising. Now, of course, that’s not the way they would express it, but that is, in fact, what they did. They created a series of bubbles, which spectacularly (and predictably) blew up, particularly screwing the little guys who didn’t know better and could least afford losses. We should not be where we are today, and we would not be here today, without their seriously screwing up Federal Reserve policy. 2. The Federal Reserve is running a two-variable experiment without the benefit of ever having run a one-variable experiment to determine what the results would be. It is decidedly the stupidest monetary policy mistake in a long line of Fed mistakes. What are the two variables? They are raising interest rates (albeit slowly) and aggressively reducing their balance sheet. I think many of the problems we see in the market are results of this combination. They should do one or the other, not both. 3. Powell and the Federal Open Market Committee listen to extremely smart PhDs from all the best schools with their fabulous multi-algorithmic models, which prove that you could raise rates and reduce the balance sheet at the same time with no problems. Bluntly, those smart people (many of whom are actually quite brilliant, and I’m sure they are nice people, and their kids and dogs love them) mistakenly trust models based on past performance, and even worse (much, unbelievably, really badly, worse, which I can’t emphasize enough!) on monetary theory that is clearly, evidently, badly, manifestly wrong. They have been using these models to forecast future market actions and the economy for decades, and they are about 0 for 300 in being right. It is statistically impossible to be that bad unless your models/assumptions are fundamentally flawed, which they are. Their underlying economic theories manifestly don’t work. https://www.mauldineconomics.com/frontlinethoughts/bear-markets-fed-mistakes-and-quick-shots-from-john%2Bmauldin+fed+uncle+john&client=safari&rls=en&hl=en&ct=clnk

~3% Held lots of Stable Value and preferreds (BAC/WFC-L) until recently when bought into fallen SV and EM and added to BRK and BAM. Like rolling, I feel richer now for having made the swap, but still waiting for a real opportunity.

Added a little BAM.

When big-cap quality is cheap (or getting there), why throw any bucks at anything else?