Buffett/Berkshire - general news

[gfp]

Bets on yet another Form 4 showing BAC sales dropping this evening?  Say around 8pm Eastern time?

[crs223]

11 hours ago, 73 Reds said:

The only reasonable conclusion is that Geico should not be in business here at all

 

I think GEICO concluded the same…

[crs223]

I recently read Buffett's letters from the 1970s.  He described a couple periods where insurance was being priced too cheaply by his competitors.  During those times he intentionally "reduced volume".  Buffett has also said that insurance is a commodity.  Customers are not loyal and there is no benefit to keeping long term customers happy (my interpretation).

[UK]

5 hours ago, gfp said:

Bets on yet another Form 4 showing BAC sales dropping this evening?  Say around 8pm Eastern time?

 

https://www.sec.gov/Archives/edgar/data/70858/000095017024087477/xslF345X05/ownership.xml

 

So WB is selling BAC, BYD, possibly even more AAPL...I am wondering what does it mean (probably nothing) or what is his alternative (probably cash) for them?

 

[Munger_Disciple]

20 minutes ago, UK said:

 

https://www.sec.gov/Archives/edgar/data/70858/000095017024087477/xslF345X05/ownership.xml

 

So WB is selling BAC, BYD, possibly even more AAPL...I am wondering what does it mean (probably nothing) or what is his alternative (probably cash) for them?

 

 

My guesses are (1) Buffett thinks these securities are overvalued or at least fully valued & he is cleaning the house for Greg, and (2) He thinks we may be entering a recession and he is beefing up the cash pile as there may be big opportunities. 

Edited July 30, 2024 by Munger_Disciple

[UK]

22 minutes ago, Munger_Disciple said:

 

My guesses are (1) Buffett thinks these securities are overvalued or at least fully valued & he is cleaning the house for Greg, and (2) He thinks we may be entering a recession and he is beefing up the cash pile as there may be big opportunities. 

 

Yes, the second point is somewhat intriguing. But after watching him/them doing nothing in 2020 (lots of opportunities) or 2022 (big tech opportunities), I do not hold my breath for any big offensive moves anymore. Would be glad to be wrong though. Being continuously defensive and cleaning the house perhaps makes a lot of sense for him now. Not sure if this is the ideal way for preparing for inevitable transition though.

 

Edited July 30, 2024 by UK

[Blugolds]

6 hours ago, UK said:

 

Yes, the second point is somewhat intriguing. But after watching him/them doing nothing in 2020 (lots of opportunities) or 2022 (big tech opportunities), I do not hold my breath for any big offensive moves anymore. Would be glad to be wrong though. Being continuously defensive and cleaning the house perhaps makes a lot of sense for him now. Not sure if this is the ideal way for preparing for inevitable transition though.

 

 

I would have liked to see him be more aggressive in 2020, Covid lows as well, hindsight is easy here, but then I remember that BRK #1 priority is to protect the base, preserve the fortress/shareholders/partners.

 

Its easy to forget that Ackman was on CNBC...CRYING, there were medical ships in the NYC harborm National Guard tent citys, the roads were closed, I am in the O&G industry and for the first time in my career the airports were NOT buying Jet fuel shipments it was crazy, there were a TON of unknowns. At the time we didnt know that it would kind of turn out to be a nothing burger, its easy to forget that the potential was there to be really really bad, like a once in a lifetime or couple lifetimes event and had the gov not been so aggressive with stimmy checks etc, the results could have been totally different and it becomes more reasonable to see why WB errored on the side of caution, it really wasnt an error, it was sticking to the primary goal of protection given the potential risks at the time and the unknowns.

 

Hindsight, yeah, should have been headed outside with buckets to catch the raining gold rather than a thimble, but again, thats with hindsight and what we know now. It could have ended up much worse than the GFC. I was looking at purchase history for BRK and I was glad that I personally was buying hand over fist during that time, so I was personally able to take advantage of the opportunity even if BRK wasnt, but I can at least reason on why they behaved the way they did.  

[UK]

1 hour ago, Blugolds said:

 

I would have liked to see him be more aggressive in 2020, Covid lows as well, hindsight is easy here, but then I remember that BRK #1 priority is to protect the base, preserve the fortress/shareholders/partners.

 

Its easy to forget that Ackman was on CNBC...CRYING, there were medical ships in the NYC harborm National Guard tent citys, the roads were closed, I am in the O&G industry and for the first time in my career the airports were NOT buying Jet fuel shipments it was crazy, there were a TON of unknowns. At the time we didnt know that it would kind of turn out to be a nothing burger, its easy to forget that the potential was there to be really really bad, like a once in a lifetime or couple lifetimes event and had the gov not been so aggressive with stimmy checks etc, the results could have been totally different and it becomes more reasonable to see why WB errored on the side of caution, it really wasnt an error, it was sticking to the primary goal of protection given the potential risks at the time and the unknowns.

 

Hindsight, yeah, should have been headed outside with buckets to catch the raining gold rather than a thimble, but again, thats with hindsight and what we know now. It could have ended up much worse than the GFC. I was looking at purchase history for BRK and I was glad that I personally was buying hand over fist during that time, so I was personally able to take advantage of the opportunity even if BRK wasnt, but I can at least reason on why they behaved the way they did.  

 

Thanks. I do not disagree with you at all, especially regarding 2020. In this covid period I was also defensive to early and soon hidding almost completely in BRK myself:)

[Eldad]

3 hours ago, Blugolds said:

 

I would have liked to see him be more aggressive in 2020, Covid lows as well, hindsight is easy here, but then I remember that BRK #1 priority is to protect the base, preserve the fortress/shareholders/partners.

 

Its easy to forget that Ackman was on CNBC...CRYING, there were medical ships in the NYC harborm National Guard tent citys, the roads were closed, I am in the O&G industry and for the first time in my career the airports were NOT buying Jet fuel shipments it was crazy, there were a TON of unknowns. At the time we didnt know that it would kind of turn out to be a nothing burger, its easy to forget that the potential was there to be really really bad, like a once in a lifetime or couple lifetimes event and had the gov not been so aggressive with stimmy checks etc, the results could have been totally different and it becomes more reasonable to see why WB errored on the side of caution, it really wasnt an error, it was sticking to the primary goal of protection given the potential risks at the time and the unknowns.

 

Hindsight, yeah, should have been headed outside with buckets to catch the raining gold rather than a thimble, but again, thats with hindsight and what we know now. It could have ended up much worse than the GFC. I was looking at purchase history for BRK and I was glad that I personally was buying hand over fist during that time, so I was personally able to take advantage of the opportunity even if BRK wasnt, but I can at least reason on why they behaved the way they did.  

He could have dipped a toe in at least. I am a stupid optimist probably but it has made me a lot of money in times like that. I still think that was kind of a black eye for them. That is one scenario where Greg would have probably been much more active. 

[Intelligent_Investor]

Buffett has long moved past the stage of his/Berkshires life where he focuses on rate of compounding. He's implied he focuses more on not losing money (and making Berkshire less volatile) in recent years due to 1) Number of older people holding Berkshire for decades and relying on it to fund retirement and 2) probably also influenced by the amount of shares held by various charities (Buffett cares that those shares will help fund causes that will make a different; he doesn't want a situation where they need to sell at a low price). Munger even said as much toward the end of his life that you basically need to hold big tech to just match the S&P, and Buffett implied as much as well (he's repeatedly said big tech is good business and you can run them with zero capital). Berkshire is good for capital preservation and will probably vastly outperform bonds and a more conservative stock portfolio, but with how the company is weighted, its highly unlikely it will be able to keep up with the S&P going forward.

[73 Reds]

Its hard to blame a 90-year old for hunkering down during a pandemic.  As with any investment, shareholders or prospective buyers should ask themselves why they want to own the stock.  Its not a stock for everyone, but conversely, owning it would probably not hurt anyone.

[charlieruane]

45 minutes ago, Eldad said:

He could have dipped a toe in at least.

 

Were the ~$50B of buybacks across 2020 and 2021 not dipping a toe? 

[Spooky]

Warren also mentioned that their phone was starting to ring in 2020 but the Fed acted so swiftly and decisively to give firms access to funding they didn't need capital from Berkshire.

[Eldad]

32 minutes ago, charlieruane said:

 

Were the ~$50B of buybacks across 2020 and 2021 not dipping a toe? 

Yeah I guess. Just being a net seller in Q2 2020 was just kind of not even trying IMO. At least do some creative option buying or throw 2/3 billion at Moodys at $165. As a shareholder I expect him to be passionate about making money. “Fauci is a national treasure and I’m doing nothing” was annoying to me personally. 

[Eldad]

Whatever day that was in March right before the Fed started buying corporate bonds, I looked at my computer and every stock in the market was down 10%+ on the day. I know that is somewhat scary for most, but I expect Charlie and Warren to be rational and pick something up in that scenario. 

[73 Reds]

2 minutes ago, Eldad said:

Whatever day that was in March right before the Fed started buying corporate bonds, I looked at my computer and every stock in the market was down 10%+ on the day. I know that is somewhat scary for most, but I expect Charlie and Warren to be rational and pick something up in that scenario. 

On that day they didn't know, nor could they even credibly predict what they didn't know.  IMO their inaction was logical but I understand why some would disagree, though Berkshire is probably not the stock for those folks.

[Eldad]

3 minutes ago, 73 Reds said:

On that day they didn't know, nor could they even credibly predict what they didn't know.  IMO their inaction was logical but I understand why some would disagree, though Berkshire is probably not the stock for those folks.

You can never know. They didn’t know in 09. Warren presents himself as a very optimistic person. Is GOOGL with a giant net cash position going out of business? Probably not maybe I should finally get some $50. I am not saying go all in, but being net sellers? 

[73 Reds]

Financial crises are very different.  In fact it is easy to predict the ultimate outcome of any financial crisis because the damage is never permanent.   You don't have to know the "when" and "how"; ultimately the country and the world will survive.  Those that have the financial strength to endure not only survive but often prosper from economic crises.  Death, however is permanent and in March 2020 there was no road-map for how we were going to overcome a worst-case scenario.

[Eldad]

18 minutes ago, 73 Reds said:

Financial crises are very different.  In fact it is easy to predict the ultimate outcome of any financial crisis because the damage is never permanent.   You don't have to know the "when" and "how"; ultimately the country and the world will survive.  Those that have the financial strength to endure not only survive but often prosper from economic crises.  Death, however is permanent and in March 2020 there was no road-map for how we were going to overcome a worst-case scenario.

I mean Spanish Flu, Third Plague, Russian Plague, etc all with much more limited science. The world continued and prospered.
 

It was clear at the time that if they were going to partially shut the world down they would have to print an unheard of amount of money. I’m sure this would have been clear to Warren and Charlie as well. That is why it kind of seemed like a lack of effort or just old dudes being scared and stubborn to me. 

[Eldad]

He always talks about buying his 1st stock during WW2 when it looked like the Axis was going to win. 60 MM died world wide in the war. Imagine the death toll if Axis had gone on unchecked for a longer period of time. 
 

We needed that WB in 2020. 

Edited July 30, 2024 by Eldad

[73 Reds]

11 minutes ago, Eldad said:

I mean Spanish Flu, Third Plague, Russian Plague, etc all with much more limited science. The world continued and prospered.
 

It was clear at the time that if they were going to partially shut the world down they would have to print an unheard of amount of money. I’m sure this would have been clear to Warren and Charlie as well. That is why it kind of seemed like a lack of effort or just old dudes being scared and stubborn to me. 

You can characterize Warren and Charlie in a lot of ways, but "lack of effort" is not one of them.  Even inactivity requires a conscious decision.  

[coffeecaninvestor]

I think he was lightening up in some of the more cyclical companies in the hopes that he would have an opportunity to put a large amount to work if things really got out of hand and went lower.. I think he probably regrets buying so early in 09', but once when the fed stepped in he knew he wouldn't get his opportunity so he turned to the next most logical thing and bought BRK. It was pretty logical, and cool headed. I don't think he was scared to pull the trigger. He knows how resilient and well capitalized the business he built is..  

[Eldad]

8 minutes ago, coffeecaninvestor said:

I think he was lightening up in some of the more cyclical companies in the hopes that he would have an opportunity to put a large amount to work if things really got out of hand and went lower.. I think he probably regrets buying so early in 09', but once when the fed stepped in he knew he wouldn't get his opportunity so he turned to the next most logical thing and bought BRK. It was pretty logical, and cool headed. I don't think he was scared to pull the trigger. He knows how resilient and well capitalized the business he built is..  

Yeah he sold airlines which was smart. No one can predict the exact bottom. When the market is obviously panicking you dip your toe in the water IMO especially if you have been complaining about opportunities to deploy capital for many years prior. 
 

Clearly it was a mistake and clearly it was out of character. I think we can all agree on that. 

[coffeecaninvestor]

9 minutes ago, Eldad said:

Yeah he sold airlines which was smart. No one can predict the exact bottom. When the market is obviously panicking you dip your toe in the water IMO especially if you have been complaining about opportunities to deploy capital for many years prior. 
 

Clearly it was a mistake and clearly it was out of character. I think we can all agree on that. 

Yes, in hindsight clearly a mistake, but  I think he makes a lot of errors of omission and he’s done ok. But I am a little biased. I was also waiting for lower prices. 

[73 Reds]

14 minutes ago, Eldad said:

Yeah he sold airlines which was smart. No one can predict the exact bottom. When the market is obviously panicking you dip your toe in the water IMO especially if you have been complaining about opportunities to deploy capital for many years prior. 
 

Clearly it was a mistake and clearly it was out of character. I think we can all agree on that. 

Nope.  But what ought to be a more common refrain these days, we can agree to disagree.