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Watsa vs. Buffett


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Buffett was on cnbc Friday and said that he thinks markets are going higher and not to sell stocks based on Ukraine and China worries. Watsa on the other hand, stated in his annual report that he thinks you should be worried about China and he is obviously short the market. Who do you think is right? Buffett? Watsa? Both?

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This is just food for thought, but has Buffett ever said to sell stocks? Perhaps limit buying (1969-73? When he closed his fund?). Buffett always says the US will be better and richer in the next hundred years. Unless this Russia issue becomes WWIII Buffett is probably right over the next 10, 20, 50, 100 years.

 

On the other had, Watsa may be thinking the next year or two, or maybe three, in which case he may be correct.

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This is just food for thought, but has Buffett ever said to sell stocks?

 

I can't remember if he said to sell (probably not explicitely), but his Sun Valley speech clearly talked about overvaluation around the dot com bubble.

 

I think in 2006, 2007 it was pretty clear that he was not crazy about equities. At the annual meeting he was always getting

beat up about having so much cash piling up - why haven't you put this cash to work, etc?

 

I remember one of his answers "If we are able to put all this cash to work - you won't like the conditions under which we are able to do that".

 

I had trouble understanding that answer until 2009 - then I got it.

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Buffett was on cnbc Friday and said that he thinks markets are going higher and not to sell stocks based on Ukraine and China worries. Watsa on the other hand, stated in his annual report that he thinks you should be worried about China and he is obviously short the market. Who do you think is right? Buffett? Watsa? Both?

 

I think this is a misrepresentation of what Buffett said. His remarks were something like "over the next 20 years stocks will go up." And when pressed about a family who had invested for their child's education and now needed to pay it out, he said it may be a good idea to sell. Basically he stuck to the same old Buffett mantra of buy and hold and not worry about the macro for long term investments, but only invest money you will not need in the next five years

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Buffett doesn't say sell unless we are extremes 1999. Buffett doesn't say Buy unless we are extremes 1974 2008. Let's be clear about what he has been saying the last couple years. To be precise all he has been saying is stocks will outperform bonds. Hardly a ringing endorsement. PW has clearly been trying to time the markets. We all have things to learn even if we are already Great.

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BRK should have over $50B in cash now and $2B in cash coming in every month.

 

That is $30B more than he would like. Just like 2007 increase in cash - it is happening again. He is not predicting but he is ready to take advantage of opportunities should they arise.

 

Watch what he does - not what is says for the larger unsophisticated audience.

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BRK should have over $50B in cash now and $2B in cash coming in every month.

 

That is $30B more than he would like. Just like 2007 increase in cash - it is happening again. He is not predicting but he is ready to take advantage of opportunities should they arise.

 

Watch what he does - not what is says for the larger unsophisticated audience.

 

+1.

 

Every time he speaks, the media gets into it, the message boards do as well, dicing and slicing every word out of his mouth. And folks are constantly looking for inconsistencies in what he said then versus now. If you don't agree with what he says, put him on your "ignore" list. Listen to others who are agreeable to you.

 

Just follow what he does. Better yet, like I did, just let him manage your money. My money was with both Watsa and Buffett, but Watsa was getting harder and harder to understand. Both his words and actions make me scratch my head. Who knows he may be not wrong at all but Buffett is so much damn easier to understand, both his words and actions. And it does not hurt at all that the cash keeps piling on at BRK.

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Being that Wasts has been more wrong about equity investing over last last 6 or so years than nearly everyone else on the entire planet, I trust Buffett's opinion a bit more.

 

Last time Watsa was wrong for that many years, he made an absolute killing on credit default swaps.

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Being that Wasts has been more wrong about equity investing over last last 6 or so years than nearly everyone else on the entire planet, I trust Buffett's opinion a bit more.

 

Last time Watsa was wrong for that many years, he made an absolute killing on credit default swaps.

 

How long was Watsa with the CDS before the crisis hit? I'm trying to remember, like 4 years?

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Being that Wasts has been more wrong about equity investing over last last 6 or so years than nearly everyone else on the entire planet, I trust Buffett's opinion a bit more.

 

Last time Watsa was wrong for that many years, he made an absolute killing on credit default swaps.

 

How long was Watsa with the CDS before the crisis hit? I'm trying to remember, like 4 years?

 

First mention of MBS and ABS risks were in March 2004.  First mention of CDS was Mar 2006.  Likely purchased in 2005, so 4 years.

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Being that Wasts has been more wrong about equity investing over last last 6 or so years than nearly everyone else on the entire planet, I trust Buffett's opinion a bit more.

 

Last time Watsa was wrong for that many years, he made an absolute killing on credit default swaps.

 

How long was Watsa with the CDS before the crisis hit? I'm trying to remember, like 4 years?

 

First mention of MBS and ABS risks were in March 2004.  First mention of CDS was Mar 2006.  Likely purchased in 2005, so 4 years.

 

Cool. Thanks. The CPI hedges were put in in what, 2010? Hmmm...4 years out if that's the case. I wonder if history will repeat itself.

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Last time he was able to identify a specific segment that was ground zero and make a non-recourse bet on this.  The contagion led to the stock market decline.  I don't see that this time as playing out this time unless you think deflation will happen.

 

Packer

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Last time he was able to identify a specific segment that was ground zero and make a non-recourse bet on this.  The contagion led to the stock market decline.  I don't see that this time as playing out this time unless you think deflation will happen.

 

Packer

 

Packer, even Eric has put on hedges! ;)

 

In all seriousness, though, I really respect you opinions and wanted to get your thoughts on this. What do you think about this?

 

http://blogs.ft.com/andrew-smithers/2014/03/a-world-awash-with-debt/

 

"Claims are often made that today’s low investment is due to “deleveraging”. This is nonsense. The figures published on March 6 by the US Federal Reserve show that corporate debt has risen by 9 per cent over the past year."

 

 

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BRK should have over $50B in cash now and $2B in cash coming in every month.

 

That is $30B more than he would like. Just like 2007 increase in cash - it is happening again. He is not predicting but he is ready to take advantage of opportunities should they arise.

 

Watch what he does - not what is says for the larger unsophisticated audience.

 

+1 - That's true wisdom...  ;)

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