LearningMachine

Any non-commodity food product that you will not substitute for another similar product even if price went up faster than general inflation, either for yourself or your kids? Could be a store-owned brand or an established packaged brand?

Thank you @John Hjorth for sharing a measured article with some rational thought. No surprises. He alluded to it but I wish he had emphasized a little more how immediately an 8% inflation rate can result in 10% interest rates, and how immediately and drastically a stock price can fall for a company with a lot of debt when its cost of capital goes from 5% to 10% vs. price increases taking 9 years to double at 8% inflation rate. As Mr. Buffett said on May 1, "conditions change very, very, very rapidly sometimes in markets." It may not happen but better to invest with the mindset of requiring reasonable returns in both situations.

This made me smile :-). I had to go look up that scene. Gotta add re-watching Big Short to my list :-).

It didn't pass my principles around debt, valuation, and historical price. I got flak for it here last year, but because @Spekulatius is asking, I'll share again: debt situation must be such that the company can survive disruptions without impacting shareholders, including possibility of interest rates shooting up to 10% anytime. The current situation is such that very few companies end up passing that bar. At debt of ~5X EBITDA and terms to-be-known on debt, Discovery wouldn't pass that bar. I understand many here believe that interest rates will not go up much and they might be right. I'd like to make reasonable returns weather it happens or doesn't happen.

Thanks @Baklava. This is the exact chat I was remembering, not Li Lu's chat. My memory had incorrectly associated it with Li Lu :-).

DISCK. I was able to get out 100%. In all the excitement, I had made a mistake in forgetting my long-term principles.

I have a faint memory that in one of Li Lu's chats, he mentions the "paternalistic" behavior of Chinese regulators, and how it had caused an odd case that a company had understated earnings so that they wouldn't have to have a negative surprise in the next earnings release. I have gone through several of his chats again, and couldn't find it in any of these: https://www.youtube.com/watch?v=FiHrWy2jGbA and Transcript of Li Lu and Bruce Greenwald - Value Investing in China - Roiss Investment Insights (substack.com) https://brianlangis.files.wordpress.com/2018/03/li-lu_s-lecture-at-columbia-2010.pdf https://www.youtube.com/watch?v=y3c2PKupiu8 I tried searching for "Li Lu" at thecobf.com, but it doesn't find anything, even though searching for Greenwald does find somethings. Anyone else remembers that chat, and has a link to the video and/or transcript?

Found someone who thinks like me about AI :-). Really like the quote at 14:10: "AIs can travel the way they are already traveling in my lab ... wirelessly" This is huge. Evolution hadn't developed an organism whose nerves could be wireless. So far :-).

Thanks @Jurgis. Am I reading it correctly that XBI's forward P/E is reasonable? Have you found it to be reliable? Other than QQQ, IWO, IWF, XBI & FSPHX, what other ETFs are you thinking might be a good way to catch growth?

Got it. One company I've been watching in biotech space seems to be operating more as an investment fund. Similar to how Sequoia buys tech companies early and takes them through IPO, this company takes drug pipelines in early stages and takes them through approval, which looks like a high ROI activity to me. The company is Biogen. It is not super-great how they have been handling their aducanumab investment, and we also don't know how well their recent other investments will actually pan-out. Have you looked into it? XBI might be able to capture some of these early pipeline companies also, but then we have to study the success rate of these companies - because of the huge pricing power, getting approval is such a huge success that maybe a low success rate could be ok? My other worry with biotech companies is that it needs just a small tweak in the law for their pricing power to deteriorate, e.g. if Medicare is allowed to negotiate with drug companies. The other issue is constant expiry of monopoly on drugs. Medical device companies can get around that through other means, e.g. new patents for the same evolving devices, brand-name, insider-secrets, more complex/evolving interfaces/functionality that is harder to copy, etc. However, they are all trading with high valuations.

If biotech is going to be the next big waive, wouldn't S&P 100 based indexes, e.g. EQWL, be able to catch it also?

I think Nortel and Cisco were more like automakers, and QCOM was more like patent owner for some technology needed for autos. None of them owned a right to scare pathways, and thus weren't like highways. The analogy for the internet could have been fiber only if more fiber was not allowed to be laid. So, fiber is not a good analogy for spectrum either.

QQQ - I have the same concerns that it is Nasdaq-only, and the company that ends up leveraging AI most might not end up being on Nasdaq Regarding IWO/IWF, I think there is a good chance that any new companies that have potential to leverage AI might go IPO after they are already quiet big in valuation. So, going with broader index might dilute your bet too much unnecessarily. Given what you said about winners taking it all in the other equal-weighted etf thread, what about S&P 100? One risk there is you miss out on the growth of the company from S&P 500 to S&P100, but there might be a good chance that such companies with huge potential might not become public until they have already reached S&P 100 market cap, and that way you dilute less over the bottom 400 in S&P 500? One risk with this approach though is that Antitrust might get more active and might not let companies get too big. While at it, how about equal-weighting S&P 100 now? Given it is S&P 100 not S&P 500, it addresses your concern to some extent about winners taking it all?

It is possible that might work. That said, this expectation is somewhat already reflected in the P/E by the market. So, if prediction ends up wrong here by any chance, e.g. new companies come and do a better job at providing technology or provide amazing consumer experiences directly, those buying at today's prices might not do as well. One thing all these bots buzzing around and even stationary bots (IOTs) will need is ability to communicate with the mothership (i.e. companies owning them) and/or with each other. For bots running around at home, that communication can be over the unlicensed spectrum at home, that then connects them over fiber to the motherships. For bots running around or stationed outside home, the communication will likely need to be over spectrum that has some sort of guaranteed availability, i.e. licensed spectrum. Spectrum for AI bots is like highways for cars. Another way to look at it is that imagine if before humans arrived, you could have figured out that they will need a way to communicate with each other and with some central data repositories/services they create. Imagine you could somehow own some percentage of audio-frequencies that humans can hear & utter, and some percentage of electromagnetic-spectrum frequencies visible to humans (e.g. black, blue, green, white colors), and humans had to pay you with their fruits of labor for using those sound & light frequencies, you could make a lot of money. Currently, there is only one company that has the most amount of cash coming in to buy out spectrum frequencies as they become available, and Buffett is investing in it. Market is currently predicting not much from this company for AI. If market prediction ends up being incorrect here, it might work in the favor of those investing in it today.

Continuing to add to Kroger - still a relatively small position.

Also, as expected, getting out of drug companies. Also, getting out of Chevron.

As expected, BRK added VZ shares, albeit not as much as I was expecting. Increased VZ stake by 8.2%, i.e. 12.1 million shares. I see VZ holding at 158,824,575 + 73,357 = 158,897,932 shares https://www.sec.gov/Archives/edgar/data/1067983/000095012321007024/xslForm13F_X01/0000950123-21-007024-4471.xml https://www.sec.gov/Archives/edgar/data/1004244/000108514621001803/xslForm13F_X01/infotable.xml' This is up from 146,716,496 + 71,907 = 146,788,403 shares. That is 12,109,529 shares added. That is $701,626,110.26 added at today's closing price of $57.94.

... and more expensive each crypto transaction gets.

Thanks @VersaillesinNY and @Spekulatius. I really like what he said about how hard it is to predict which company will be successful in some areas long term, e.g. Facebook was the 11th social network Before Google, there was a company called Yahoo, and If cryptocurrency ends up being used for exchanges, the winning cryptocurrency might not even be invented yet

At the May 1st BRK AGM, Buffet's lesson from 1903 was inspiring for me: Imagine you see a quick glance from 2040-2050: AI can learn and do anything that 90-95% of humans do today for work. What's the best way to invest to benefit from that glance of AI future? Here is a list of what humans are doing today: https://www.bls.gov/oes/current/area_emp_chart/area_emp_chart.htm. Here is the list of U.S. companies by number of employees: https://en.wikipedia.org/wiki/List_of_largest_United_States–based_employers_globally. Imagine a lot of those things that humans do today could be done by AI. Which companies will capture the value creation from that AI future for their shareholders? Will it be some existing brands and companies whose customers continue to stay loyal to them or have no choice, where companies can use AI to reduce employment costs? Will it be some new companies that patent it well and license the technologies for other companies to use? Will it be some new companies that come up with amazingly new customer experiences at great price-points using these technologies? Are there highway-equivalents that you can buy now that will be needed with 100% certainty in that AI future by AI bots buzzing around? Back in 1999, imagine you had the glance from the future that Internet was going to change the world. How could you have invested so that you would have picked Amazon and Apple, as well as, Google and Facebook, when they went public, while avoiding investing in thousands of DotCom companies that went bankrupt? Imagine back in 1999, you also decided that you didn't want to have to sell anything to pay capital gains. Is the only way to pick Google and Facebook automatically as they went public would have been through picking an ETF or Index fund? Which ETF or Index fund would have picked them up automatically? Would that have picked Amazon and Apple as well? Would that be able to pick automatically any new companies that benefit from AI in the future? Is there a better answer than S&P 500?

Thanks, I'm thinking the same. I wouldn't be surprised if the upcoming 13F shows he is now out of BMY and ABBV.

Our memories are not as reliable as the transcripts are :-). Here is what Buffett said exactly: In other words, what he said was that he is not going to put $50 billion into something like that :-). I doubt it includes Verizon as he understands that business well as he had the confidence to tell the questioner who asked about Verizon that "he's analyzed the situation well ... he's very capable of thinking it through very well himself."

Thanks @Thelilyinvestor for sharing and thanks @Krapdivad for highlighting. I like how Buffett openly shared, "[W]e'd love to put that to work...we won't get a chance to do it under these conditions, but conditions change very, very, very rapidly sometimes in markets." Have we ever seen Buffett use three "very"s in a sequence to indicate how strongly he believes in being ready for that opportunity?

I wonder what the conversation between Munger and Buffett was like after that, and if Buffett is thinking he will need to be more cautious with Munger leaking things that they had presumably jointly agreed to not yet share publicly :-).

@Xerxes, you are probably right. Do I remember correctly that Buffett publicly committed to the Japanese companies that he will be a long term shareholder? Which companies do you think he might have meant, given he started talking about them as "And they are as a group." Maybe some of the pharma companies, e.g. BMY and ABBV? I think figuring out the answer to this question will help us figure out what he sold in Q1.