Buffett/Berkshire - general news

[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 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.

[Eldad]

5 minutes ago, coffeecaninvestor said:

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. 

Yes. Part of my frustration was being mostly educated on markets by him and having most of my money in BRK and buying a lot more in the 160s being extremely confident he would make out like a bandit. 
 

73Red is going to die on the hill of it was not a mistake even in hindsight. Ok, agree to disagree. 

[73 Reds]

10 minutes ago, Eldad said:

Yes. Part of my frustration was being mostly educated on markets by him and having most of my money in BRK and buying a lot more in the 160s being extremely confident he would make out like a bandit. 
 

73Red is going to die on the hill of it was not a mistake even in hindsight. Ok, agree to disagree. 

Of course - almost anything can be deemed a mistake of sorts in hindsight because through that lens there is always some better way.    

[Eldad]

4 minutes ago, 73 Reds said:

Of course - almost anything can be deemed a mistake of sorts in hindsight because through that lens there is always some better way.    

True. It would be really cool to know exactly what happened and exactly what they were thinking at certain times. I’m just doing arithmetic and he is doing calculus. I got lucky by not having the analysis paralysis that he was probably dealing with. 

[Whensthepaintdry?]

Not buying stocks aggressively during the Covid drop doesn’t bother me at all. The one that has me scratching my head was the drop in 2023. Amzn and google both had huge drops. I was totally expecting to see an add too amzn, but later there was a cut. While being conservative the performance has been great, so I’m a happy shareholder. 

Edited July 30 by Whensthepaintdry?

[Eldad]

8 minutes ago, Whensthepaintdry? said:

Not buying stocks aggressively during the Covid drop doesn’t bother me at all. The one that has me scratching my head was the drop in 2023. Amzn and google both had huge drops. I was totally expecting to see an add too amzn, but later there was a cut. While being conservative the performance has been great, so I’m a happy shareholder. 

Yeah would be cool if his stocks looked more like SPY plus float plus buybacks he could outperform on autopilot. 

[Blugolds]

12 minutes ago, Eldad said:

True. It would be really cool to know exactly what happened and exactly what they were thinking at certain times. I’m just doing arithmetic and he is doing calculus. I got lucky by not having the analysis paralysis that he was probably dealing with. 

 

Just now, charlieruane said:

"Mistake in hindsight" - almost a meaningless phrase. What matters is whether Berkshire made a mistake in the moment, given available information. 

 

And again, he did "dip his toes" by plowing $50B into all of the businesses that Berkshire already owned (via buybacks). It was a solid outcome. 

 

 

 

Another thing to consider, and I think I remember hearing it at a shareholder meeting maybe, I cant remember exactly. 

 

A hypothetical, but also probability I would say better than zero...is that with the pandemic scare, maybe the phones WERE ringing in Omaha, and they were discussing particulars working on a deal perhaps, explains the hesitation to deploy capital elsewhere, and then due to the swift rescue by the feds, the deal never transpired and to outsiders it looked like they were sitting there sucking their thumb. 

 

[Eldad]

Here we sit at $440 4 years later which is amazing when you think about it. 

[Munger_Disciple]

55 minutes ago, charlieruane said:

"Mistake in hindsight" - almost a meaningless phrase. What matters is whether Berkshire made a mistake in the moment, given available information. 

 

And again, he did "dip his toes" by plowing $50B into all of the businesses that Berkshire already owned (via buybacks). It was a solid outcome. 

 

  I for one am very happy the way Buffett managed through Covid. 

[yesman182]

I personally think that when Warren is gone Berkshire will buy way less stocks. Greg will focus on running the business, he will buy back stock when appropriate. Do some acquisitions, but I don’t see him hunting down 50-100bn elephants. If someone come knocking sure, they will listen, but I don’t see him spending him time figuring out where to park the 200bn in stocks. 

[UK]

11 hours ago, Eldad said:

Here we sit at $440 4 years later which is amazing when you think about it. 

 

True. Very nice CAGR. And it was a double from 2020 pandemic low price of ~170 USD as early as March 2022! You definitely can make a nice return with BRK, especially buying it at a price near BV. The similarly good price and opportunity was in 2012. In both cases WB confirming it with a buybacks (with a start in 2012 and large actual buybacks in 2020-21) was telling. I made BRK a very large position in both cases. My question is what about the next 5 or 10 years from a current valuation though?

 

I have another, somewhat new worry, regarding the next 10 years. So first of all, WB is my personal hero and I consider him Mozart of investing. But does anyone else have at least some worries with a plan he has  for a possible management transition in the future? Is it really the best way to do it? I have personal bitter experience of what old age (or related health issues) can do to a person and his decision making capacity, no matter who he was before. Many talk here about how his priority is safety and avoiding volatility or uncertainty for long term shareholders etc. But then why not let Greg to become a CEO and to allow him to run BRK for some time, hopefully still long time!, watching him from a position of chairman (or just of a large shareholder), while you are still sharp and able? 

 

Sorry for asking of such a question, maybe I do not understand this completely or worry too much.  Like I said, I have enormous respect for WB and BRK, and I am still a shareholder myself.

 

Edited July 31 by UK

[Blugolds]

6 hours ago, UK said:

 

. But then why not let Greg to become a CEO and to allow him to run BRK for some time, hopefully still long time!, watching him from a position of chairman (or just of a large shareholder), while you are still sharp and able? 

 

 

 

I guess my thinking is that this IS what he is doing, we see it at shareholder meetings now featuring Warren and Greg at the front table. Without coming out and saying it, my guess is that Greg is basically doing the job already, like a kid riding a bike, mom/dad are holding on to the back of the bike seat and running along the bike, the kid knows/thinks they are there and gives them confidence and then without the kid specifically watching the parents hand pull away from the seat, and still running along side the bike they are riding the bike on their own without the assistance before they even realize it. My guess is that already, or soon, Warrens hand is off the back of the seat, or only occasionally hanging on to the seat while running along side Greg. 

 

If it was ANY other CEO I think the transition probably already happens and louder, but given its WB, and BRK and those two are so connected, it makes it a bigger deal for perception. I personally dont worry about it. Warren is probably one of the most intelligent and thoughtful partners an investor could ask for, and this creation he has made through his life work is his baby, and he certainly has considered all angles for his succession, he had the ability to pick probably anybody in the world to replace him and Greg was his choice, I'm sure he has considered Gregs strengths and weaknesses and will accommodate anything that he felt might pose a challenge. Im sure they have discussed theories and strategies there. I think that they both realize that Greg isnt going to be doing 20% a year but Im also sure that they have discussed options to ensure "adequate" returns for remaining shareholders going forward and what those potential levers are as options for Greg. To continue your Mozart analogy, I fully expect Warrens succession plan to be his Crescendo ending. 

 

This is all speculation, but this is the way I think about it, and it gives me faith because if I, as a simpleton think this way and this would be my goal and the way I would attempt to do things myself if I was in Warrens position, certainly he must think beyond me as he and Charlie are the ones who created the masterpiece and are certainly levels above my own ability. 

[UK]

9 minutes ago, Blugolds said:

 

I guess my thinking is that this IS what he is doing, we see it at shareholder meetings now featuring Warren and Greg at the front table. Without coming out and saying it, my guess is that Greg is basically doing the job already, like a kid riding a bike, mom/dad are holding on to the back of the bike seat and running along the bike, the kid knows/thinks they are there and gives them confidence and then without the kid specifically watching the parents hand pull away from the seat, and still running along side the bike they are riding the bike on their own without the assistance before they even realize it. My guess is that already, or soon, Warrens hand is off the back of the seat, or only occasionally hanging on to the seat while running along side Greg. 

 

If it was ANY other CEO I think the transition probably already happens and louder, but given its WB, and BRK and those two are so connected, it makes it a bigger deal for perception. I personally dont worry about it. Warren is probably one of the most intelligent and thoughtful partners an investor could ask for, and this creation he has made through his life work is his baby, and he certainly has considered all angles for his succession, he had the ability to pick probably anybody in the world to replace him and Greg was his choice, I'm sure he has considered Gregs strengths and weaknesses and will accommodate anything that he felt might pose a challenge. Im sure they have discussed theories and strategies there. I think that they both realize that Greg isnt going to be doing 20% a year but Im also sure that they have discussed options to ensure "adequate" returns for remaining shareholders going forward and what those potential levers are as options for Greg. To continue your Mozart analogy, I fully expect Warrens succession plan to be his Crescendo ending. 

 

This is all speculation, but this is the way I think about it, and it gives me faith because if I, as a simpleton think this way and this would be my goal and the way I would attempt to do things myself if I was in Warrens position, certainly he must think beyond me as he and Charlie are the ones who created the masterpiece and are certainly levels above my own ability. 

 

Thanks for your response! Most likely you are right.

[charlieruane]

Greg is definitely running the show operationally—Buffett has even said that when CEOs need input from HQ these days, they typically call Greg. 

 

I expect buybacks to become even more systematic in the 20 years following Buffett's departure. When the stock is too expensive for buybacks to make sense, and once the cash pile grows beyond, say, ~20% of intrinsic value, Berkshire will probably issue special dividends (per recent comments from board member Sue Decker). Whale-sized acquisitions will probably become very scarce, if they continue at all (per comments from board member Chris Davis)—and if they do continue, they'll happen primarily during recessions/panics. 

 

Bolt-ons, internal reinvestment, buybacks, and special dividends are what we should expect in the post-Buffett decades. Berkshire will further cement itself as a low-risk, decentralized, still-relatively-tax-efficient capital-returning machine. Adequate returns with minute risk of permanent impairment of capital. This Berkshire will make for a great "hurdle rate" investment, i.e. its risk-adjusted returns are likely to be fairly attractive most of the time, so one can by default allocate capital there when lacking other ideas. That's a useful security in my book!

Edited July 31 by charlieruane