wabuffo

CB - bringing up the savings rate is another very interesting aspect of the effects of US Treasury deficit spending. As I indicated upthread, US deficit spending adds new bank deposits (and therefore new financial assets) into the private sector. So it is therefore, an accounting identity that: 1) Public sector (federal govt) deficits = Private sector (households and business) surpluses (ie., savings) 2) The private sector = US domestic private sector + Foreign sector (which "saves" USD assets via running a trade surplus with us). The period from 1997-2007 provides some interesting data that seems to highlight how the Federal budget surpluses in 1997-2001 and the increase in trade with China (through China's entry into the WTO in 2001) delivered a 1-2 punch which forced the US private sector to increase its borrowing to maintain its consumption - and the main source of that borrowing was via the housing market. First, here's the calculation starting with the year 1994. The federal deficit that year was -2.51% of GDP. Thus, the private sector surplus was equal +2.51% of GDP. The private sector in 1994 saved an amount equal to 2.5% of GDP. But there is a foreign private sector and a US domestic private sector. In 1994, the foreign sector ran a trade surplus = 1.63% of GDP. So if total private sector had savings of 2.51%, the US domestic private sector had 2.51-1.63 = savings of 0.89% of GDP. That's how the calculations work. Here's the table for every year from 1994-2016 (I did this a few years ago and haven't updated the numbers since - probably should do that!) This table shows how starting in 1997, the Federal deficits started to tip over into a surplus. As it goes from nearly zero to a surplus of 2.42% of GDP in 2001, the private sector starts to get squeezed and begins to run a deficit (ie, take on debt) to maintain its consumption. But because the trade deficit is persistent (the rest of the world needs to net save a portion of its growing wealth in super-safe USD assets), the domestic US private sector gets really squeezed. This leads to the recession of 2000-2002 with the worst year being 2000 (US private sector runs a deficit of 6.3% of GDP). In the far left, I start a cumulative effect column which mathematically adds the deficits in a cumulative fashion (I'm not sure this is actually mathematically correct but it indicates the level of falling savings/rising debt that the US domestic private sector is feeling). The recession of 2000-2002 tips the US federal budget from surplus into deficit and this relieves a bit of the pressure of US households and businesses in 2002-2004. But the growing effect of trade with China (plus a rising oil price which the US still is a net importer of) continues to press down. Paradoxically, the US budget deficit starts to shrink again in 2006-2007 just as the trade deficit hits its peak at 5-6% of GDP. This delivers the coup-de-grace to the US private sector in 2006-2007 as debt once again increases. This of course leads to the Great Financial Crisis of 2008 and the opening of US Treasury deficit spending in 2008-2012. You can see that both the combination of the deficit plus the GFC impact on foreign trade relieves the savings pressure on the US domestic private sector and savings rates zoom higher. The cumulative effect also improves - though not quite getting back to 1994 levels. Here's another chart that shows for the same 1994-2016 period: US GDP, Household Sector Debt and Business Sector Debt. This chart highlights the tremendous growth in leverage and debt that peaked in 2008 - particularly for households (but also business sector too). One final table - this time comparing the deficit/surplus with the effect on the dollar (as measured by its price in gold). People worry about deficits leading to inflation. Even MMTers admit that the size of the deficit (even with a Green New Deal or Jobs Guarantee) will always be limited by inflation. But inflation as measured by the CPI is a flawed concept, IMHO. I watch the gold price instead as a measure of currency debasement. Whatever you think of gold (and lots of value investors hate it or ridicule it) - it has an important attribute - stability in its supply. Annual gold production, year-in and year-out averages 2% per year vs above-ground inventory. No other commodity (or currency) has that kind of supply-to-inventory ratio (though I guess Bitcoin follows the same 2% limit on annual supply growth rule). This makes gold an excellent measuring stick from a collateral value perspective. Anyhoo - I just wanted to highlight that when the US ran a persistent surplus in 1997-2001, the gold price fell. This means that there was an undercurrent of monetary deflation happening. Its also interesting to note that when the deficits-to-GDP grew large in the late 2009-2012 period, gold ran up significantly in price. These days, deficits are climbing again and will probably go above 10% of GDP - for how long? who knows. But gold is rising again. What can I say - I'm a monetary theory nerd. Sorry for the long post. wabuffo

I would imagine most of the COBF board members would not be changing their spending habits if interest rates on savings are 1 or 2% higher, if they notice them at all. Macro forces are powerful and sometimes you can't feel them as they move slowly. But as I showed earlier the numbers are quite large. Ok - let's try this a different way. Think of it from a pension perspective - similar to a defined benefit pension plan. Lower rates increase the future liabilities in present value terms due to the effects on discount rates. Lower rates also affect expected returns on current assets. They are lower. The effect of lower returns on assets and higher present value of liabilities for a pension (or for someone trying to save for retirement) is the requirement for more cash to be put into the retirement plan. This diverts from consumption. Again I point to how as the Fed was raising rates in 2018 led to higher quarterly GDP prints (3-3.5% per Q). After the Fed did a U-turn and starting dropping rates in 2019, quarterly GDP fell to the 2-2.1% per Q range. No doubt, the US economy is complex and subject to a multitude of forces - but I am convinced that lower rates hurt the economy more than they help. We can agree to disagree. Its an interesting question, though, to ponder that the Federal Reserve could be hurting the US economy when it thinks its helping by lowering rates. This is different than its effect when it is acting as a lender-of-last-resort (which has nothing to do with rates) as it has been in this crisis. wabuffo

This is helpful to the economy the way I see it. With QE, Treasury is not borrowing money from the public to pay the interest. So how is the public missing out on the interest income? Public did not lend money and they are not getting interest. So no effect in that regard. The US Federal Govt spends first, then borrows. If not, how does the private sector ever get the govt's money? Taxation and other forms of payment to the US government create the private sector's need for the government's money which the govt provides via spending. It then borrows to remove the reserves it has created in the banking system. States and municipalities can't do this since they are not allowed to issue their own currencies. This is why the Eurozone has so many problems - nations like Greece and France can no longer issue their own currency and must balance their budgets. Even here it is interesting to watch states like Illinois and California sometimes get into severe budget crises and then issue IOUs which they give value to (in order for vendors to accept) by allowing these IOUs to extinguish state tax and fee obligations. This proves the model that US Federal govt's money is basically an IOU that the private sector needs to extinguish its tax liabilities - except its more formal and systematized such that we don't even think about it at all. It follows that the Federal govt (after creating the tax obligations, must spend first in order for the private sector to be able to pay its taxes - just like a municipal bus system must issue tokens first, so that riders can exchange them for bus rides). Now, instead of borrowing from the public (via selling of Treasuries), it gets money from the Federal Reserve (indirectly via the Banks) and what does it do with the money? It spending it on the public. Especially all the COVID programs. They are spending it without either taxing the money from the public or borrowing from the public. So why is that not massively helping the economy? Yes, the concerns about this seemingly easy way to fund the Government programs are valid, but we cannot say it is not helping the economy. I'm not following what you are saying here. Could you re-phrase? wabuffo

Take a simplistic case of savers being all billionaires and debtors being all poor households. Vinod1 - let's move from the hypothetical and go right to the film. From the Fed's Z.1 report: https://www.federalreserve.gov/releases/z1/20200312/z1.pdf Cop a squint at p.152 From that page, here's a high-level balance sheet for US households (Q4, 2019 - $billions): ASSETS: 04. Real Estate (households - owner-occupied).....$29,326 11. Time and Savings Deposits...........................$10,163 12. Money-Market Fund Shares...........................$ 2,148 LIABILITIES: 33. One-to-Four-Family Residential Mortgages.....$10,610 34: Consumer Credit........................................$ 4,191 So let's ignore the effect of low rates on pensions and post-retirement benefits. This household balance sheet snapshot at the end of last-year shows about $12.2 trillion held in short‐term rate‐sensitive instruments like savings accounts and money market funds. On the liability side, most household liabilities are fixed‐rate mortgages, where payments are unaffected by rate changes. Consumer credit is made up of credit card debt and car lease payments and totals $4.2 trillion, most of which is also fixed. But let's assume that 25% of the household debt can be made variable interest. Net, net - (assuming 75% of the liabilities are fixed rate) we can estimate that households have about $8.6 trillion in exposure to short‐term interest rates, so a 1% change in rates adds about $86 billion to annual income. Thus, I maintain that lowering rates punishes households more than it helps them. Its not a coincidence, IMHO, that GDP growth took off in 2017 and 2018 when the Fed started to raise rates and slowed down in 2019 when they started to lower them again. wabuffo

Maybe there is a differentiation between gov't and Fed since the Fed is technically independent? Nope - they are both agencies of the Federal government. The Federal Reserve is basically the US Treasury's bank. They co-ordinate their policy. They have to. Government debt in inflationary upon issue and deflationary upon service and repayment. I don't think so. US Treasury deficit spending creates excess reserves in the banking system, US Treasury net debt issuance soaks them up - without the debt, the banks' reserves would equal the size of net debt held by the public (over $19t - instead of the current $3t of bank reserves at the Fed). That's because US Treasury spending creates a new deposit in the banking system (and a new bank reserve for that bank). US Treasury debt issuance is an interest rate maintenance activity - it sets the long-term risk free rates along the yield curve by replacing a private sector bank deposit (and reducing the corresponding bank reserve) with a Treasury bond - while the Federal Reserve sets the short term risk-free rates via its interest on excess reserves. The Federal Reserve and US Treasury together set benchmark risk-free rates along the entire yield curve at whatever they want them to be - since the alternative would be $19t of bank reserves getting zero today. There's also arguments like the more the government spends on interest is less money the government can spend on other things Nope - no such thing as "crowding out". The US Treasury has no constraints other than courting inflation. When you pay your taxes in cash, the US Treasury/Fed shred the bills (so much for needing taxes in order to spend). wabuffo

1) QE should *raise* rates, not lower them. Huh? You should tell that to the Fed. They think they are doing long-term yield curve suppression. The Fed lowered short-term rates to zero. The talk now is over yield curve control. 2) There may be some minor interest income that is lost, but the overwhelming factor is the increase in lending that can result. It is not minor - cop a squint at the Fed's Z.1 report and then think through which rates tend to be fixed (credit cards) and which variable and look at household assets and liabilities. It is pretty major hit to income. And that's before the effect on pensions and other forms of saving. There are problems with the money multiplier... Money mutliplier is a flawed concept because it tries to use to different currencies (private sector money and bank reserves). Monetary base includes reserves which don't flow to the private sector and are controlled by the Fed (now that we have massive excess reserves). Reserves are inert. Banks do not and have not needed reserves to lend since a new loan in the banking sector creates a deposit simultaneously. Bank lending is driven by whether banks can make money given the credit risk, collateral quality and capital costs. If the economy slows as it will under QE, there will be less risk appetite, not more. wabuffo

I think he used a poor choice of words - instead of deflationary, I think he's not talking about a monetary vector, but an economic one. He means slower growth - and not monetary deflation such as occurs in a financial debt panic. The reason for QE being an economic growth suppressant, in my view, is for two reasons: 1) QE tries to push rates down. But, low interest rates punish savers more than they help debtors. The low rates force savers to save even more, thus cutting consumption, which slows economic growth. 2) QE replaces interest expense from the US Treasury - which flows to the private sector as income. The Fed swaps Treasury debt held by the private sector with reserves held by the banks. While the Fed pays the banks interest on their excess reserves, it stays in the reserve accounts at the Fed and does not flow to the private sector. So QE takes interest income away from the broader economy and doesn't replace it with any other forms of income for the private sector - so its a net loss of income Both of these factors hurt the economy - despite the intention by the Federal Reserve to try to stimulate it. wabuffo

Druckenmiller says the government's massive stimulus push is more likely to be deflationary than inflationary. I have no idea what he is talking about - I don't think he does either..... 8) I remember a line from a great Motley Fool poster (howardroark) that has stuck with me over the years that I think describes Druckenmiller, Tepper, etc. I view them as great investors who seem to also be great traders with an ability to zig and zag at many of the right times .... "I sometimes think of those few investors who are actually great as having only slightly more attentional control over their talents as Eric Dickerson [NFL Hall-Of-Fame RB] did over his stride -- that much of the fancy talk is after-the-fact mere description, and that often the key decision process is mostly magic even to the decider." wabuffo

How did you learn this stuff and could you recommend some books or articles on this? https://macromusings.libsyn.com/144-peter-stella-on-debt-safe-assets-and-central-bank-operations This is a good podcast on the Fed and central bank monetary operations. It was recorded before the repo mess in Sept and the current crisis but its a good overview of the Fed and US Treasury's actions during and after the GFC. The Fed's website also has a lot of good background as well. You should familiarize yourself with the H.4.1 report as well as the US Daily Treasury Statement. They connect at the US Treasury's General Account balance every week. Hope this helps - I'm a bit of nerd for this kind of stuff. If you have any further questions, I could try to answer them - though I'm always learning too. wabuffo

I don't have much to add to the ROIC/depreciated PP&E value question - except to make a couple of points about manufacturing facilities. Land is land and doesn't depreciate. Buildings do not wear out even for fifty years. When it comes to production lines and manufacturing equipment, there is regular maintenance capital, but I would argue that production lines get replaced more likely for changes to the companies product offerings, new product introductions, or labor-savings than because of wear and tear. Sure, things break down or new safety or environmental standards might require upgrades - but for the most part capital expenditures are made to earn a return and that requires new sources of production volume and/or incremental margins. This brings me to my major point. Here I will quote Benjamin Graham (Security Analysis, 1940 ed, Ch XXXVI): I've worked for major public manufacturing-oriented companies. Plants are closed while they are still very functional and productive and not due to degraded equipment. They are closed because volumes are down and two plants can be consolidated into one. In addition, I've seen companies make investing mistakes (from a shareholder return) building new plants in low-growth industries when the old plants were working just fine. When I look at manufacturing companies, I adjust the concept of maintenance capital to mean, not how much capex must be invested to maintain the equipment, but rather how much must be invested to maintain the company's current production volumes and competitive position. In some cases (particularly in the tech sector), I would even argue that acquisitions are often maintenance-related in that they cover for a declining base business and only maintain current profitability (rather than enhancing or growing it). HP was a good example of this - the ample free cash flow kept getting plowed into acquisitions to cover for a declining core business. The point is, don't get overly focused on depreciation and ROIC as accounting questions, they need to be looked at as competitive positioning questions and factories are just assets that need to be evaluated in that context. wabuffo

To me it looks like Fed and Treasury seems to be working very well together. Fed is indirectly funding the Treasury. Since Treasury cannot all the bonds that it wants to sell without higher yields, Fed is buying them. Vinod, the US Treasury is having no problem selling US Treasury Bonds to the public and doesn't need the Fed to buy any of them (in fact, the Fed is prohibited from buying any of the Treasury's debt directly - it must buy the debt from the open market). The Fed is buying them for its own purposes. That's why I used the example in an earlier post about how the Fed, in carrying out its QE program, is converting long-term US Treasury debt issued at fixed and low yields at issuance into short-term reserve liabilities of the Fed at variable yields that could go a lot higher than the yields of the bonds the Fed just purchased. If you combine the interest expense paid by both the Fed and the US Treasury as basically federal government spending - the "savings" are being dissipated. So in total, they are un-coordinated since the Fed is partially reversing the debt management strategy of the US Treasury. wabuffo

The reserves will end up on the balance sheets of the large banks only after they have been spent by the government (the initial recipients of that money). This is the "deficit spending", and in the short term it does create broad money. The problem, however, is that this process is inflationary, and tends to make investors (and indeed those banks) less willing to lend of their own accord, meaning that there is less cash available for investment - causing destruction of broad money in the longer term. Basically agree with this - US Treasury deficit spending creates new financial deposits in the banking sector (via Fed reducing reserves in US Treasury general account and increasing bank reserves by same amount). I wouldn't say that this process is necessarily inflationary unless deficits as % of GDP are greater than: - annual GDP growth (2-3% per year) as one yardstick, or - the annual increase in new gold supply vs above-ground inventory (~2% per year), as another possible yardstick. Of course, this year we are going waaaay above these levels. How high? No idea - but it will be over 10%, maybe approaching 15-20%. But again the Fed is not doing any heavy lifting here - its all due to the US Treasury. Even if the Fed gets all the attention and infamy. wabuffo

Yep, hard to predict the timing of when the fed hits major problems I'm not sure what this means exactly? What "problems" will the Fed "hit"? Nothing it does affects anything except interest rates. It doesn't affect the supply of money at all. wabuffo

The whole operation makes no sense to me. Here's an example -- everyone is saying the US Treasury should issue long-term bonds (20-year, 30-year) while interest rates are so low (and, hey! - lock in those low rates!). But then the Fed comes in and buys those long-term bonds under QE and replaces them with reserves on which it pays interest at SHORT-TERM variable rates. Thus, the rates are no longer locked and will fluctuate (possibly a lot higher over the next 20-30 years). They are sucking and blowing at the same time.... Fed and US Treasury monetary needs a major re-think. The Bank of Canada runs the entire monetary operations of Canada with basically ZERO bank reserves (though even the BoC is starting to do a minor version of QE, ...ugh!). wabuffo

The size of the Fed balance sheet is irrelevant - we're already at zero rates. The Fed typically owns ~10-20% of the net debt issued to the public by the US Treasury (BTW this is a normal range for the Fed). Per the May 6th Fed H.4.1 report, the Fed owns $4t of US Treasury debt out of $19.2t total US Treasury debt o/s. (you can find this number on the US Treasury Daily Report for May 6th). But even if it bought 100% of all the US Treasury debt outstanding that it didn't already own (19.3t - 4.0t = $15.2t), the only impact would be to increase the size of reserves held by the banking sector. Essentially the Fed would buy $15.2t of Treasury debt in exchange for $15.2t of new bank reserves via the US banks as intermediaries (as it must - since only federally-chartered banks, a few other financial companies and the US Treasury have accounts at the Fed). Those bank reserves are deposits in accounts at F.R banks and can't circulate outside the Federal inter-bank clearing system. They are really check and e-payment clearing accounts. So the net effect would be to consume the balance sheets of US banks with reserves and drive all interest rates to whatever the Fed pays on excess reserves (currently zero). US bank reserves on May 6th were $3.2t which corresponds to "Cash Assets" of $3.2t in the Fed's H8 report - "Assets and Liabilities of Commercial Banks in the United States". US banks total assets on May 6th were $20.3t. Thus the Fed would force US banking sector cash balances to go to $3.T + $15.3t = $18.3t This would essentially liquidate the entire US banking sector and turn it into a huge cash box ($18.3t/20.3t = 90% of bank assets would turn into cash on deposit at F.R. banks). I think in this hypothetical environment, what would the economy look like with a zombified banking sector and no available US Treasuries for anyone, anywhere? It basically demonstrates that the Fed can buy anything it wants, but its only currency is a very specific one that you and I can't access. Therefore, it is taking out liquid assets (Treasuries, IG bonds, stocks?, baseball cards?) and replacing them with illiquid assets that must sit as a cash asset in the banking sector via a contra-liability account at the Fed. The more the Fed balance sheet grows, the less safe, liquid assets exist for the rest of us. I don't see how that helps the private sector and I think it actually hurts it. The reality is that the Fed isn't the major factor in money creation since it can only lend via swapping assets for bank reserves. It is the US treasury and its deficit spending that is the major money creator. All of the attention on the Federal Reserve is misdirected. It also shows how disjointed monetary operations are when you have two players (the Fed and the US Treasury) that often work at cross-purposes and neutralize each other. wabuffo

Do you guys know of any books about the market in the 70s? What specifically are you looking for? I recommend: 1) Paper Money, by 'Adam Smith' (George Goodman) - the Money Game and Supermoney are good too - but cover more of the 60s. Buffett makes an appearance in Supermoney (before he was broadly known and famous) IIRC. 2) Money Masters, by John Train (also covers Buffett's early years) 3) A Random Walk Down Wall Street, by Burton Malkiel - more of a investing strategy book but covers the times a little. 4) How to Buy Stocks, by Louis Engel 5) The Only Investment Guide You'll Ever Need, by Andrew Tobias - kind of a personal finance book written with humor and plain talk (but talks about the inflation, taxes and stock markets of the 70s). 6) Winning on Wall Street, by Martin Zweig Not sure if this is what you are looking for - but this is what I remember as covering the 1970s. None of them are stock market history books if that's what you are looking for.

It’s niche - but still used in some medical devices (pacemakers, heading aids). Many types of industrial sensors. It’s not growing but it generates 65% FCF margins and yields over 7%. Cash rich - $14 of cash per share. wabuffo

NVEC. I love a company has a buyback program but only buys shares when they are really cheap. They bought shares in late 2015, early 2016 and then stopped. They didn't buy in Jan or Feb this year but in March they started buying again! Quite the contrast to other mgmts that buy back shares mechanically EXCEPT during market swoons when mysteriously, they stop buying back their own shares at the lows. wabuffo

ATCO, KNOP KNOP reports Q1 before mkt open on 5/28 - but I expect it will be steady-as-she-goes... My add - BWXT. I recently bought some during the dip into the $40s. I guess the business of refurbishing the US Navy's submarine and aircraft carrier nuclear reactor power systems is unaffected by the macro environment. wabuffo

But in this crisis, it is being asked to water down the collateral against which it will lend." By whom? i thought it was supposed to be an independent institution. I always think of the Federal Reserve as the US Treasury's banker. All the 'rules' are political artifacts, not hard constraints. On one side of the table sit the Fed and the Treasury. Across from them sits the private sector. A couple of other points about this crisis. 1) If you look closely at the Fed's balance sheet, around half of its liabilities are assets that are owned by foreign entities or circulate outside the US domestic economy. I think this is an underappreciated aspect of the US budget deficit and monetary operations. The rest of the world needs US dollars and US dollar assets. Increasingly, the Fed is having to support the foreign sector with its programs. 2) For all of the heavy breathing about the Federal Reserve 'monetizing' the US Treasury's borrowing, the Fed owns the same percentage of US federal debt held by the public today as it did in the 'good old days' before the Great Financial Crisis and the current crisis (16%). Sometimes the numbers just get really big and we fail to put them in context. wabuffo

But if so, the “10%” number is kind of meaningless right Yep - meaningless. The Fed is not supposed to lend to anything but the very best collateral (Treasuries) since it must never become insolvent. If you look at its H.4.1 weekly balance sheet you can see it has only a tiny sliver of "equity capital". $63B of capital supports $6.6T of assets so even a 1% loss allowance makes it insolvent. But in this crisis, it is being asked to water down the collateral against which it will lend. The SPV structure is just a political structure to allow it to do this while appearing to prevent losses to itself. Losses will be borne by the US Treasury probably via its General Acct at the Fed. I would imagine the US Treasury would just issue cash-management bills to the Fed or write down its Treasury acct balance to cover any losses. But its small potatoes vs all of the deficit spending the US Treasury is doing to do this year. wabuffo

The biggest disagreement I have is that I think the Fed will do absolutely anything to avoid a deflation trap. In fact with the latest round of interventions they are hinting how determined they are. Those interventions are not just another round of QE (which isn’t necessarily inflation-inducing for reasons correctly discussed in the interview), they are a step toward some real money printing. In terms of "money printing", I always think in terms of this short-hand rule about US monetary operations: 1) US Treasury spends - creates a new reserve in the private sector banking system (money printing)* 2) US Treasury issues debt - swaps a reserve in the private sector banking system for an interesting earning asset. (asset swap) 3) Fed does a repo (or lends) - swaps a private sector interesting earning asset (collateral) for a reserve in the private sector banking system or vice versa (asset swap). I think its pretty clear that money printing comes from the US Treasury (and not the Fed). The Fed is lending against collateral. It may sometimes weaken the collateral it is lending against, but it is still lending (swapping assets). So I would argue the Fed is not doing any money-printing. It helps me to think about every Fed/US Treasury transaction with the private sector from a T-account (debit/credit) point of view. And bank reserves are not money creation. They are chequing accounts at the Fed for federally-chartered banks. Reserve balances are there to clear payments between the banks. They can only circulate between the Fed and the banks. The size of reserves are a policy decision by the Fed and its regulators. Almost every new program that the Fed has announced is a lending program vs some collateral. The US Treasury, on the other hand, has postponed April Federal tax receipts (April is a big intake month for tax receipts) and is spending pretty aggressively (ie, sending direct deposits and cheques to all Americans, etc). Don't focus on the Fed - focus on the US Treasury as it creates new deposits in the US banking system out of thin air this month. The key metric to watch IMHO is always US Treasury spending (net of tax receipts and other collections) as a % of GDP. We really only run the risk of USD devaluation when we ramp up to 10% or above. We are heading there now - though it will be a cumulative effect over the next few months into the summer. *[of course, this spend is net of tax receipts - but the US runs a perpetual annual deficit except for '98-01] wabuffo

At first glance, those numbers a bit disappointing. On the other hand, that's $1B in three weeks To be fair, those updated share counts are through March 4. BRK-B (for example) was still trading well above $200 til then with the lowest intra-day low of $199.68 in late Feb. Prices really declined since then and trading volumes ramped up. There's no guarantee that Buffett got more active since March 4th - but here's hoping he did. wabuffo

The lesson from 2003 (after the 2000-02 deflationary bust) and 2009 (after the 2008 GFC) is -- buy the trashiest micro-caps you can and buy a bunch. Their share prices go up the highest. In my previous post about which stocks performed the best after the deflationary bust of 2000-02, I mentioned a study I saw about 2003 stock performance by various classes of stocks. It was from Morningstar. I was able to find the article and am posting a link here: https://www.morningstar.com/articles/102369/the-real-stock-market-story-of-2003 Some highlights: Of course, I am in no way recommending this strategy. wabuffo

Strange thing to see all canned tuna is gone canned items tend to have a seasonal harvest/catch. For vegetables, for example, the packing into cans happens in the fall and the items put into inventory with/without labels (for private label - the "bright" cans are labelled just-in-time) and shipped out per demand. If there is a sudden surge in demand and inventory is depleted, that could be it until next fall. Food is an agricultural item that has to be processed based on its season (though global sourcing helps for some items and provides more year-round supply). Commitments for supply are made way in advance. There are lots of individual supply chain wrinkles for individual food items and the supply chains are more flexible and agile than in the past - but this surge in demand is historic because 50% of food consumption is out-of-home and that is shifting to in-home plus the "run-on-the-bank" hoarding has amplified the underlying trend. For food companies, no doubt its a good thing (though many supply foodservice as well) - but their inventory forecasting models and product supply chains are encountering the equivalent of a financial six-sigma event. And that is before dealing with the management of the myriad human resource issues of working-from-home and the very real hourly employee health-and-safety safeguards that must be undertaken. The food companies have really stepped up to the plate in the face of this storm, IMHO. wabuffo