Parsad

Oil prices flattening...metal prices cratering...commodities flattening or dropping...inventory levels getting higher and higher...some companies starting to layoff... Countered by: Supply chain backlogs...high price for distribution (shipping, gas, diesel)...continued crisis in Ukraine...lack of workers...likely increases of prices at retail level in Q3...expected 50 basis point hikes in July and September... Is inflation going to start to ease up in 3rd and 4th Quarters of 2022? I suspect some deflationary pressure in some areas where inventory levels will be too high before Christmas: https://www.cnn.com/2022/06/26/business/retail-returns/index.html Cheers!

Howard Marks is buying, so we can't be that dumb! He's a pretty bright guy. Cheers! https://www.ft.com/content/a3f14c51-0b1c-416e-84db-0fa0fc842f1f?ftcamp=traffic/partner/feed_headline/us_yahoo/auddev

Perma bears are perma bears...just like perma bulls. They will never see the upside or downside of stocks. Cheers!

Yes. There is a hardcore loyalty to Buffett and all things Buffett. That subgroup, many will choose that Berkshire without Buffett, is no longer Berkshire. 40% would be on the extreme side...but a 20-25% drop is more than plausible and probably likely. Cheers!

There was a report of two twins recently...one adopted by a U.S. family as a baby who ended up with significant economic and family issues, while the other twin was adopted as a baby by a financially comfortable family in Korea. While the twins had similar personality traits, likes and dislikes, there was a fast difference in IQ...the Korean twin's IQ was some 15-20 points higher. So, its likely the nature and nurture both have significant influence on who we are and what we become. Cheers!

+1! Cheers!

Joe Brandon's a terrific insurance executive, but as an executive under Ronald Ferguson he did not recognize the errors with the AIG transaction that led to criminal charges against Ferguson and a couple of other executives, nor did he recognize the derivatives risk that GenRe was carrying. Those were two big errors in a very complicated game, and if Berkshire had not acquired GenRe, GenRe would have been another AIG in 2008! Buffett was completely involved in unwinding thousands and thousands of derivatives contracts for several years...I believe they had only a handful left before the financial crisis. The Markels & Gaynor, alongside Prem, Andy & Brian, as well as Buffett & Jain, all clearly recognized the havoc and risks of derivatives. They avoided that time bomb. So, I put these insurance executives on another level than their peers. Avoiding catastrophic outlier risk is what reinsurance is all about! Cheers!

It's like the difference between Fairfax insurance operations with and without Andy Barnard. There is huge marked difference with Andy overseeing and creating a certain culture in underwriting and operations. Buffett and Ajit maintain a similar integrity with the Berkshire insurance operations. So yes, I'm not pinning it only on Jain...I'm pinning it on Buffett and Jain. Cheers!

There is an easy solution. Berkshire should just buy Markel and make Tom Gaynor vice-president of insurance operations and president of portfolio management, while Ajit Jain is president of insurance operations and Greg Abel is president of non-insurance operations. Gaynor has worked in a co-leader position and is a terrific investor and insurance manager. Abel is presently working as a co-leader with Buffett, and then would not have to worry about float, insurance or portfolio management if something happened to Warren and Ajit. The two T's probably know Gaynor well, and would fit in nicely as a team. Ajit already knows Markel and Gaynor, and Ajit's lack of ego would be a good environment for Gaynor. And Gaynor's better at risk management than say the likes of Joe Brandon at Alleghany or many of the other Berkshire insurance subs other than National Indemnity. Cheers!

Well, the two guys that were supposed to lead...Ajit Jain and David Sokol...one has gotten older and the other departed on poor terms (and is also older). Finding such quality people is like finding a needle in a haystack. It is sad, but are we really surprised that there aren't a lot of Buffetts or even lesser Buffetts floating around everywhere? Berkshire shareholders were not just lucky...they won the lottery with the man! He's not just a great investor, businessman and leader, but he's one that survived so long and was able to continue running the business for so long. That's a lottery win! Cheers!

Insurance remains Berkshire's largest business and will continue to be the engine of the company. So, at the very least, I would be concerned about who takes over for Ajit, as National Indemnity is not only Berkshire's biggest insurance business, but biggest business overall. Insurance is all about risk management, and if the two people best at that...Buffett and Ajit...are gone from the company, then that is a concern. Bigger than investing float, since they could easily index the equity side, and find a good bond manager to look after the bond portfolio. Cheers!

I would imagine it would be at least a 10% drop the day the news is announced and 20-40% drop over a period of time as hedge fund managers, small investors mull it over and sell. It will also depend on how much cash Berkshire has and how much support the stock gets from BRK buybacks when it starts dropping. As well as value fund managers probably buying stock too. It would be back up near fair value within 12-18 months once sellers clear and equilibrium returns and people realize the stock will still do reasonably well long-term. Cheers!

Really? Making money is that important?!

Gandhi and Martin Luther King weren't wealthy, but I would say they had as much of a social, and indirect economic, impact as any person in history...probably as well as the Suffragettes. Huge classes of displaced citizens/workers that suddenly had the world opened to them, created economic activity, educational opportunity, entrepreneurship and changes in rights...at least until three days ago, where we went back 50 years! Cheers!

I outperformed by about 7 percent annualized in the personal accounts in aggregate between November 1999 and the end of May 2022...14.2% annualized including dividends...a couple of times there was like just one stock in the portfolio (BRK in 1999/2000 and FFH in 2003) as well as a nearly 60% holding of FFH again between late 2020 and mid-late 2021...so the concentration at times helped. The fund on the other hand, had a lot of PDH for the last 8 years and the concentration there did not help...so well...SPY or BRK easily did better! Cheers!

Legitimate question! The one area that no one can replace Buffett is risk management...maybe only Ajit is as good. How many people can see that 1 in a million risk, that somehow over time becomes 1 in 50? To be prepared for that! To write contracts that avoid that! To buy businesses that survive that! Only time will tell. Cheers!

Ajit is far fitter than I am, and every time I've met him over the last 20 years, he seems like he hasn't aged. But he is 70 now. Abel is relatively young at 60...but he's Canadian like myself and probably eats a lot of back bacon and maple syrup! It should be noted that Berkshire will continue to do well, with or without Buffett & Munger, but because of it's sheer size, it will never be the Berkshire of old that grew at 20% annualized. You will probably do marginally better than the S&P500 long-term. Once Ajit is gone too, that advantage will diminish further, probably on par with the S&P500 at best. The most valuable thing to take away from Berkshire is not Berkshire stock, but the teachings of Buffett & Munger around Berkshire. That will do more for you in life than Berkshire stock now at this point. Cheers!

I've only been below 20% cash like 5 times...2000-2001 (Tech Bubble - Value Cheap), 2003/2004 (FFH Collapses From Shorts), 2009/2010 (After Financial Crisis), 2020 (Pandemic), and now again. I'm always early to buy and early to sell, but I get the periods of cheap stocks right almost all of the time! Sadly because I tend to sell early, I usually miss a year or two of upside returns, but then that is made up by the cash holdings which start early too and I don't get hit by the bear markets (other than the pandemic)...for example, I'm up this year 3-4%, while markets are down 19-28%...but as the bull market returns at some point, I'll probably sell a year early at least from the peak! C'est la vie! Cheers!

I don't fall in love with any single stock, even if I named the website after it. I love BRK, but it just isn't cheap enough right now compared to other opportunities. I would say BRK is cheaper than AMZN, which I own, but I'm concerned about Buffett's age. I hope he lives as long as Methusaleh, but that would be wishful thinking. So it's also partly risk management presently. I need a bigger discount to protect against the age risk. Cheers!

I agree with you that margins will shrink slightly, quarter by quarter, as there is always a delay before manufacturers pass the added costs on to retailers, in turn consumers. But that may not impact overall earnings if revenues each quarter are nominally higher due to previous quarter hikes in prices. You have price hikes and product volume shrinkage...that should allow decreases in margins to be softer rather than a harder landing. Especially if interest rates start to have some effect and we start to get some equilibrium between rates, inflation and consumption. I agree with some of the other comments that this will drag out a couple of years...but there will be spurts of losses and rebounds along the way. Won't be a crash landing like 2008/2009 or the pandemic...more like 2000-2002...and you will probably have this continued separation between value and growth. Cheers!

Banks will get hit during a recession, as loan losses will generally increase, but the severity of the losses is dependent on risk management of the loan portfolio. Many banks suffer large consequences during recessions, because they tend to focus their loan portfolio on specific areas, or the quality of the loans deteriorate...such as requiring less in deposits on mortgages, lower credit rating loans, excessive commercial lending, etc. During economic booms, many banks try to keep up with the Joneses, and start to do reckless things. That's why the management of the bank is probably the most important aspect of any investment in banks. Great example is Citigroup compared to Bank of America, and the risk profile of the underlying assets and loan portfolio over the last decade. Cheers!

Are earnings going to get whacked? What is whacked exactly...earnings off 2-3% or earnings off 10%+? From everything I'm seeing, earnings look to be flat or slightly down for the next 2 quarters...I bet you they are good after the Christmas quarter. Drop in consumption is being supported by an increase in the cost of goods sold...since jobs are plentiful, incomes are higher and consumers are still spending. If the average consumer buys 10% less ketchup, but the price is up 7-8%, what is the net hit to revenues? Certainly not a deep recession "whack", but probably a light recession hit. A lot of that is already priced into many stocks. I think this may be a prolonged up and down market...down 20-30%, then a rebound up 30-40%, then down again 15-30%, then up 20-30%...as things unwind, interest rates slowly rise...a new equilibrium has to be set each time, and it won't be a comfortable market like we saw between 2010-2019...it will be a stock picker market. Cheers!

One of the best groups of the 21st century, with arguably one of the great female lead singers/frontwoman...the Yeah Yeah Yeahs and Karen Oh...their latest album, nine years since their last, comes out on iTunes on September 30, 2022! https://www.nme.com/news/music/yeah-yeah-yeahs-announce-long-awaited-new-album-cool-it-down-with-perfume-genius-collaboration-3238197

Banks (conventional banks) because of their leverage generally can thrive in most environments...they make a nominal spread, after relatively fixed expenses, between their lending products and their savings products multiplied by the leverage in asset to equity. As long as they stick to that, they generally can stay out of trouble whether it's an inflationary, deflationary or stagnating environment. The banks that do get into trouble usually have loans in concentrated areas (regional, commercial, housing, etc) that default either because of outlier events...savings and loans crisis, financial bubble in housing, broad economic losses during the Great Depression...or their loan portfolio wasn't diversified enough on a industry/regional level. It's probably one of the simplest businesses to run, but to do it successfully over a long-period of time means excellent risk management by those that run it. Again, I'm talking about conventional banks (large or small). But we hear about bank failures mainly because of poor risk management or greed leads to banks entering lines of business they really shouldn't be in. Cheers!

My pleasure! Cheers!