dealraker

I don't mean to point this out too much but I do so to rationalize what I'm trying to ask...which I am quite interested in discussing. Others will maybe, or maybe not at all interested. I guess we will see. So I'm 68, my parents died very young and I inherited a few stocks, and my small town wealthy brother-in-law put me in an investment club with he and 24 others. These were the business heads of my community and all those except two including my bro-in-law are now dead. I found it intersting that several of the men literally owned every stock we ever mentioned in the club to buy. The club began in 1954 and this is the mid 1970's when I joined and I'm still in business graduate school. So my perspective today is quite long which is sort of typical of older investors- which seems counter intuitive of course- but it is what it is. Here's my question: Buffett has said or written of course that inflation is the thief...and so forth. But I have a wood framed Securities Research 100 plus year chart in my basement, it is about 5 feet wide and has multiple lines on it. The years on it are 1892 to 1998, and I'm guessing I bought it in 1998 or 1999. On the chart it is easy to see Dow earnings and beginning in the 1950's S and P earnings. From looking at this chart I will state and it is generalized that other than the Great Depression that the "earnings line" just steps up each and every year. AND (here's the basis of my question) during the inflationary years of the 70's/80's earnings went up clearly faster. So my question is this: Of course it is logical to pay less for stocks if interest rates/inflation (or whatever the combo is) is higher given you can do CD's/bonds etc.....but do we equity investors worry far too much about inflation in the long run? I am also aware that profit margins averaged 6% or so and have escalated significantly so a second question is: Are inflation, or lack thereof, and profit margins linked and if so to what degree? My premise is that staying invested is the best option and I pretty much got this wild ass view (being a tad facetious or silly) because those in my club 40 years ago always stayed fully invested.

I inherited a few stocks in 1975 and began work as an insurance and banking analyst in 1978. I have basically gradually acquired stocks now for all these years and have not sold any stocks. The reason for not selling is probably deeply psychological given my parents early death and my connection needs. But anyway I have a few 100 baggers. Anyone in my shoes would have the same if you, for whatever reason (and there could be many), accidently acted as I did. I tend to do well avoiding losses but I did own several stocks that went to zero. One was Bank of Granite, the CEO John Forlines, was asked by Warren Buffett to stand and be honored at one of the annual meetings, I was there and watched. But I own some NSC. Plug in that I inherited a small bit of my Grandmother's shares, it has now been in the family 81 years. 11% a year annual return. That looks pretty good in a compound calculator outcome. I don't do well with timing nor absolutes, most things are gray to me. But I love reading Gregmal's strong opinions and Parsad's reasonable responses.

Further on Grantham and stock/business prices...or is it values? Or what are we really focusing on? Business value is often built best or most during downturns. All kinds of price inflations and price collapses are in the future or present --- and past of course. Secular change and cycles are not the same. My family owned newspapers and a.m. radio stations, both secular change disasters that fortunately we didn't fully experience because we sold early enough and diversified. We also owned several builders supplies, sold all but one and basically indexed in the markets (along with buying a lot of Lowe's because we thought they were superior to us) which turned out bizarre fantastic --- that was 40 years ago. I was a partner buying and building an insurance broker that we merged with one of the big shots --- mainly because a new guy showed up in town and was cleaning our clock, yes running circles around us and we could not keep up. But the insurance broker business somehow remains phenomenal --and we have made many multiples of our merger price- which I'm perplexed with to say the least. In the end we did far better than the young man (6 years younger than me) who was kicking our butts in town. But who could have predicted that...or anything else? Not me. In any event I'm a tad annoyed with the Grantham types and their endless writings that obviously seek eyeballs and admiration. There's too many things to do other than sit around trying to expert the next 7 or scream bloody murder that this or that is sure to happen --- of course because it happened in the past. My wife and I own 300 or so stocks (I often begin to count them but lose interest), and most began with outlays of $3000 or so, much like what my Berkshire stock was worth when I inherited it. Over time? Oh my, change for the good. Prices to me aren't value. Value is what you get over time averaging out the ups and downs in extremes. Grantham discusses stock market prices endlessly and he loves words that if you read them too much? Well, you're likely to need drugs and counseling and likely both. Life is great...if you can stand it. A percentage in cash is a fantastic idea and much needed for living consistently and sanity. Over time cash heads towards zero in value with a good amount of speed. If you are the type to hold a large cash position at all times then I'd basically tell you, if you are young, to count that as zero in your net worth calculation. And if you are smart enough to know when to hold lots of cash? Well, you are a person I'm not aware of yet.

68 and retired for a while. The wind down of life in my view isn't simple --- as stopping all risk taking in all various types of things likely quickens demise. I still retain somewhat of a keeping up the properties game because it keeps me functioning efficiently. I still race my mountain bike in the grand masters 60 and over cross country events. I dont win, but I finish.

Grantham's investing isn't anywhere as drama oriented as his writing. His writing disorients me completely and I quit reading it.

Thanks gfp. I was one of the first members of this forum, but decided to get off for a while. But I got back on recently.

While I've owned my shares of Berkshire since inheritance I do remember best the period of 1999 and there abouts. Valueline would do their report on Berkshire and state that there would be little growth of any kind in sales, usually they'd state 6%, and profits then of $1.2 billion were likely not attainable in the next few years. While making these typical-for-Berkshire forecasts or targets Valueline would state that GE $180 bil sales and $30 bil of (fake) profits would grow earnings 17-18% for years to come. Valueline was equally positive on Intel, the growth of sales and profits there was an expected 25%. So Berk had back then sales of about $30 bil and profits of around $1 bil and growth forecasts were simply pathetic. The focus was on the growth sectors of technology and the view that "the Internet is just beginning." Interestingly to me today is that Berk and likely Buffett have increased their energy allocations. I have for decades participated on Berkshire forum boards, the latest for many years has been the Motley Fool board. Recently after the trend on that board were comments of pretty intense criticisms towards Buffett for buying OXY instead of Google I simply made a short statement that I "guessed" that energy may, just may, be the better investment going forward. Not only were my comments removed I was permanantly kicked off the Berkshire board. No bad language, no over-the-top expertise type comments, just energy related. So we are in an era where both Berkshire and energy are off-topic for those "seeking alpha" - we are almost all in agreement that Berkshire lacks growth characteristics. That's where we are and it will be interesting to see what happens from here.

5 of us penned "The 12 Ways GE Misleads Investors" in the year 1999. While few were ever willing to read this, no one ever contested the facts of our presentation. Jack Welch in my view is, and likely will always be relative to GE's size in the market at that time, the biggest financial fraud in history. But he was untouchable, and to some degree still is. Life is great if you can stand it.

A few in my family are beginning to feel the gravitational pull in to the SAAS arena. They are especially aware of the family history where a some (not me) made nearly 100 times their money with EMC stock back in the mid 1990's through early 2000. I politely reminded them that these EMC investors had bought the stock at a PE ratio of 18 and watched earnings grow 35-50% annual for 6 years while the PE ratio went to nearly 200. Today you are buying entities in the SAAS world with either little or no earnings and 40-60 price-to-sales. With inevitable compressing valuations laced with super-duper hyper growth the game gets very addicting. Random intermittent outcomes are the most intense suck-in of all.

Given I both despised Jack Welch and have spent years making comedy over GE's financial statements...the shocking truth is that I did this: 03/07/2022 Buy 1000 GEPopup GENERAL ELEC CO NEW @ $87.7007

Been overweighting available allocations to energy since reading much about the sector being smallest ever in market cap three or so years ago. I think an energy super-cycle is underway but not yet recognized by too many.

(Previous board member who took a long break here.) You guys shouldn't forget Michael Murphy, the high tech newsletter guy who had a fabulous run in the late 1990's and early 2000's. This gives his exciting history but is written before his real demise: https://money.cnn.com/magazines/moneymag/moneymag_archive/2000/10/15/289518/index.htm