Spooky

You're onto something here Parsad. Either taxes need to rise or spending needs to be cut - otherwise the US could be headed for a similar story to what is happening in the UK with yields on government bonds rising sharply. The Fed is not really in control of interest rates on government debt, rather it is market participants' willingness to lend to the government. There is a scenario where US interests could end up being higher than the market is currently forecasting and we know what would happen to stocks in this scenario.

He sure does love T-Bills right now. Up to $288 B from $129 B at year end! I wonder how much of the equity sales are tied to: a) the risk of higher potential taxes after the election; b) overvaluation of Apple; or c) probability of some kind of financial crash. Buffett always said he doesn't do market timing / macro but he has been pretty good at it in the past. For point c) one thing I have been thinking about are Elon's comments if Trump wins where he will slash government spending by $2 Trillion. Given how much government spending / deficits are contributing to GDP currently this could create a serious recession.

The hurdle rate at CSU was only lowered for larger acquisitions over $100M.

These issues are not really business issues. Dividend policy can change but it does not fundamentally alter anything about the underlying businesses.

Short answer to the question in the thread: Yes. Given the structure of the company it can continue to compound long after after WB is gone. The decentralized nature of the company means it can keep scaling. They still have an amazing insurance business generating more and more float to re-invest. They hold a collection of durable, high moat, above average businesses. Extremely strong balance sheet and a low cost of capital. Well positioned to benefit from the continued growth of the US economy over time. Making smart investments in Japan. Also, I trust Warren and Charlie to have identified the best person to take over once they are gone. Seems like an easy source of high risk adjusted returns compared to alternatives out there. I will continue to sleep soundly with a large percentage of my net worth in Berkshire.

Sounds great. I love case studies. Congrats on the book!

Thanks for the insights Parsad. Are there any stocks, sectors or markets which you view as unloved today?

Agree, this looks like a no brainer. Happy Berk now owns 100% of the energy division.

Gold in a portfolio only really works to smooth out volatility - so unless you are re-balancing to take advantage it just hurts your returns over time and you are subject to market timing risks and transaction costs. For this purpose you are also better off holding T-bills since at least they generate some interest. Also, the real risk to your portfolio is not volatility but rather permanent loss of capital or not having enough assets to fund your desired lifestyle in retirement after inflation.

The introduction was pretty funny, value investing is really out of style haha.

Yes this is the big risk that we need to be sensitive to - use multiple brokers, be globally diversified, etc.. Having a small amount of Bitcoin or gold for piece of mind makes sense, it's a crazy world and anything can happen.

If you have a long enough time horizon (i.e. leaving money for grand kids per the original post) then stocks are still the place to be. Over a 200+ year period (1801-2014) gold had a 0.5% annualized real return. Basically you preserved your purchasing power. Meanwhile over that period US stocks had an annualized real return of 6.7%. This is after inflation! This includes both periods of the 1930s and 1970s. Even if you were in Europe and survived WW2, the place to be was in stocks. In Stocks for the Long Run by Siegel he has data from 19 other countries showing that, despite many disasters visited on these countries, such as war, hyperinflation, and depression, every one of these countries exhibited substantially positive after-inflation stock returns. This includes Germany, France, Italy, Belgium after WW2. The place that you don't want to be in cash and government bonds!!

Seconded. Stocks for the long run.

Personally, I'm not that concerned with Berkshire's cash position at the moment. At least now they are earning decent interest income on cash. Looking around the world, the geopolitical situation is worrying - seems like lots of potential instability and conflict. War in the middle east as well as Europe with Russia aligning with Iran / China / North Korea. I wonder if the Apple sale is partly driven by risk management given its exposure to China when US and Chinese tensions are high and deteriorating. Not a bad time to have a healthy cash allocation and assets concentrated in safe jurisdictions. Also, Buffett is the goat and has proven his doubters wrong many times. Who am I to question him.

https://on.ft.com/3XdktnN Article in the FT on the US housing market - housing starts on track to fall 16% this year with US homebuilders facing their highest credit crunch in more than a decade and banks cutting lending for residential construction by more than 10%. All of this amid a housing shortage.

Thanks for sharing. I'm curious.

I love when everyone thinks Warren is washed up - those have been great times to buy!

For me this year I have been buying decent amounts of Fairfax, JOE and Enbridge. Also added to some BRK.B at the start of the year. Sold BN, BAC and PARA.

I find that it is the opposite. I'm only comfortable concentrating in positions I'm willing to hold for the long term. I have never sold a share of BRK or CSU but have added to them over the years.

Definitely agree with Munger. Trying to find good companies I can hold for 10 years or longerand just let them do their thing and compound. Been holding BRK and CSU now as 75% of my portfolio for about 7 years and they have treated me well. Also gives the advantage of lower taxes and transaction costs. Not really sure if I will ever sell these two companies.

Latest memo from Howard Marks about the recent bout of market volatility: https://www.oaktreecapital.com/docs/default-source/memos/mr-market-miscalculates.pdf?sfvrsn=ddfe5566_3 Worth it for some of the cartoons he has included alone.

Thanks Dealraker for your insights. I am guilty of trying to calculate my returns on an annual basis but it is mainly for the purpose of bench-marking against the S&P 500 to make sure my investing process is working. Part of me is always worried I should just buy the S&P and I am hurting myself in the long run. I'm lucky though that I have a long term orientation and am just looking to buy a few great companies and sit of on my ass(ets). What criteria do you use to make sure you are invested in great companies? Maybe I should benchmark over a longer time horizon than one year. One thing I heard on a podcast recently (think it was value after hours) was that people focus on the "r" in the formula x*(1+r)^n rather than the "n". The "n" or number of years has a bigger impact on compound returns since it is not linear.

A bunch of my friends who lean more towards the meme stock / Bitcoin / Nvidia universe are so wrapped up in Fed watch. Some were buying short term options on Nvidia. Seems to be a big thing with the younger reddit generation of traders - very short term oriented so Fed speeches are big events for them.

Me too, he is one of the best interviewers around.

Did you ever find a good version John?