Munger interview WSJ 4/17/20

[vinod1]

I do not think banks are a layup right now. If you line up some scenarios of how virus/economic situation could play out, there is a scenario which involves heavy dilution and/or government bailout to banks. Not likely but a lot more than a zero chance.

 

I would be really shocked if Berkshire backed up the truck on banks at this time.

 

Vinod

Not directed at you, but the general question you raise:

 

 

Well, then what is a good buy? A month ago the entire market tanked. OK - let's say BRK has totally sour views on banking, energy, and anything travel-related.

 

What about the rest of the economy? Surely there were some bargains in unrelated industries?

 

I think if they are holding their breath for desperate business owners to call them up, begging to sell out, then they will go blue in the face before that phone rings. If they can't find bargains as investors in public markets during a viral market rout, then go run a PE shop.

 

My comments are directed specifically at banks. I put 50% of my wife retirement account into BAC in January 2016 at about $12. I would not do something like that now, because the risks are quite different. I did buy a bank but sized the position accordingly.

 

There are lots of other things to buy during the lows like Booking as its long term survivability is not in doubt.

 

Would Buffett be buying up stocks at the stock market bottom? I wish he would do it, but it is very likely he would not.

 

The way I am thinking about it is, Buffett is close to 90 years of age, and at that stage of his life, he is not going to be like a 30 or 40 year old. He has billions and nothing more to prove to anyone. He just not going to be that aggressive. It is not like he is going to be watching the stock market prices, see Citi hit $32 get excited and issue a bunch of buy orders. That is what many of our fellow COBF board members would do.

 

I do not have much hope that he would ever get aggressive going forward. He had so many opportunities to do so right from 2008 onwards and he did not do so. I think if we expect him to change you would be dissappointed.

 

Vinod

[Spekulatius]

I do not think banks are a layup right now. If you line up some scenarios of how virus/economic situation could play out, there is a scenario which involves heavy dilution and/or government bailout to banks. Not likely but a lot more than a zero chance.

 

I would be really shocked if Berkshire backed up the truck on banks at this time.

 

Vinod

 

Banks looking at roughly 2 years of lost earnings (20% fair value loss with a 10 PE) and a couple of years if not permanently lower earnings power . It’s not too hard  to come up with a 40% fair value loss. Maybe give back some for lower discount rates,but still. I don’t think the share price losses have been much in excess of the fair value losses.

 

They area only a bargain when above assumptions are incorrect and we reverse to the mean quicker.

[vinod1]

Take a simple scenario where we do not have a cure or vaccine for the virus until middle of next year and the virus mutates and becomes more virulent. Is this an improbable scenario? Not to my mind.

 

Then GDP would be at say 70% in Q2, 80-85% in Q3 & Q4. Likely around 90% in first half of 2021. Many banks would have difficulty coming through without severe dilution in this cases.

 

Vinod

[vinod1]

I do not think banks are a layup right now. If you line up some scenarios of how virus/economic situation could play out, there is a scenario which involves heavy dilution and/or government bailout to banks. Not likely but a lot more than a zero chance.

 

I would be really shocked if Berkshire backed up the truck on banks at this time.

 

Vinod

 

Banks looking at roughly 2 years of lost earnings (20% fair value loss with a 10 PE) and a couple of years if not permanently lower earnings power . It’s not too hard  to come up with a 40% fair value loss. Maybe give back some for lower discount rates,but still. I don’t think the share price losses have been much in excess of the fair value losses.

 

They area only a bargain when above assumptions are incorrect and we reverse to the mean quicker.

 

It is going to be path dependent and that is the main problem. Losses are going to be concentrated into a couple of quarters and that raises the potential for dilution.

 

Vinod

[nickenumbers]

Munger is not interest in talking UP the BRK stock.  He doesn't care and he is not a Selling shareholder.  If there is a chance that WEB and the HQ is repurchasing the shares...  Munger would have a double preference to talk down the economy. 

 

Munger has said that his family and his estate is LONG in BRK, and share repurchases at low prices work for him.

 

I am not suggesting anything nefarious, but Munger thinks very long term.  Maybe he is playing poker against the short term selling shareholders in favor of the long term staying shareholders.

 

I am ready to be wrong.  Thoughts?

[kmukul]

Take a simple scenario where we do not have a cure or vaccine for the virus until middle of next year and the virus mutates and becomes more virulent. Is this an improbable scenario? Not to my mind.

 

Then GDP would be at say 70% in Q2, 80-85% in Q3 & Q4. Likely around 90% in first half of 2021. Many banks would have difficulty coming through without severe dilution in this cases.

 

Vinod

what is some other virus that we knew two months back mutated? We live in a world of risks. The risks havent really gone up in the long term.

[Viking]

Buffett was taught by Graham. He is old enough to understand what real wealth destruction truly looks like. Not saying anything WILL happen. But the odds of a terrible economic outcome happening are going up with each passing week (for those who are paying attention). Eyes wide open :-)

 

From Wikipedia: Graham's Beginnings

After graduating from Columbia University in 1914, Graham went to work on Wall Street, which enabled him to cultivate a sizable personal nest egg over the next 15 years. Sadly, Graham lost most of his money in the stock market crash of 1929 and the subsequent Great Depression.

 

Graham was very candid about his poor performance during the Depression. I recently re-read an article (https://www.capitalideasonline.com/wordpress/benjamin-graham-and-the-great-crash/) where Graham recounts his experiences following the Crash of 1929. The whole thing is worth reading, but in particular, I found one story related by Graham from the Winter of 1930 to be especially compelling:

 

 

Hazel had met a man named John Dix, who was ninety-three years old. His father had founded the John Dix Uniform Company of Long Branch, New Jersey, and I had often passed their large factory on the way to Deal. I visited this Mr. Dix at his home in St. Petersburg and found him surprisingly alert for one so close to the century mark. He asked me all about my business, how many clients I had, how much money lowed to banks and brokers, and innumerable other questions. I answered them politely but with smug self-confidence. Sud­denly John Dix said, with the greatest earnestness: “Mr. Gra­ham, I want you to do something of the greatest importance to yourself. Get on the train to New York tomorrow; go to your office, sell out your securities; payoff your debts, and return their capital to your partners. I wouldn’t be able to sleep one moment at night if I were in your position in these times, and you shouldn’t be able to sleep either. I’m much older than you, with lots more experience, and you’d better take my advice.”

 

I thanked the old man, a bit condescendingly no doubt, and said I would think over his suggestion. Then I hastened to put it out of my mind. Dix was not far from his dotage, he couldn’t possibly understand my system of operations, his ideas were preposterous. As it happened he was 100 percent right and I 100 percent wrong. ... The stock market in early 1930 had a nice recovery from the previous year’s collapse. By April, the DJIA had reached 279, marking a gain of some 41 percent from the low point of 198 on November 13, 1929. But soon the entire economic picture clouded over because of the Credit Anstalt failure, and a sec­ond major decline set in which was to continue, with relatively short interruptions, until the DJIA reached the abysmally low level of 42 in June 1932. ... Our loss for 1930 was a staggering 50½ percent; that for 1931 was 16 percent; but that for 1932 was only 3 percent – a com­parative triumph. The cumulative losses for 1929 through 1932-before the tide turned-were thus 70 percent of our proud 2½  million capital of January 1929.

———————————————-

Nomad, thanks for posting the link... great read. Here is another great paragraph. In bear markets the psychological damage is more difficult to deal with than the actual financial loss.

 

“I can sympathize with the desperation of my old friend (who committed suicide), and almost with his tragic end, because to some degree I went through comparable dismay and apprehension for more than three years. It is true that I wasn’t ruined and that at the low­est point I still had means which would have seemed quite large to me only ten years before. But wealth and poverty are relative terms-a poor man in New York would be a rich man in Calcutta, and practically everyone who has lost four-fifths of his wealth considers he has suffered a disaster no matter how much he has left. The chief burden on my mind was not so much the actual shrinkage of my fortune as the lengthy attri­tion, the repeated disappointments after the tide had seemed to turn, the ultimate uncertainty about whether the Depres­sion and the losses would ever come to an end. Add to this the realization that I was responsible for the fortunes of many rel­atives and friends, that they were as apprehensive and dis­traught as I myself, and one may understand better the feel­ing of defeat and near-despair that almost overmastered me towards the end.”

[TwoCitiesCapital]

At every point over the last decade buffett has said if rates stay low he'd be buying the s&p all day long.  So this virus comes along and we're in a temporary shut down and we suddenly think he changes his tune? Or Munger?  If berkshire can't buy when the market draws down close to 40% while their holdings (especially banks) are getting whack by 50% what's the point in even holding his positions? He might as well go 100% cash.  He must think it recovers at some point.  If he believes that is he willing to just take a round trip and do nothing when he's sitting on 20% cash of market cap and wait for sunny days to start deploying it?  Seems counter to everything these guys have ever preached.

 

I'm shocked that people still listen to what Buffett says and ignore what he does. Buffett's advice on television is for grandmothers who don't know anything about stocks. If you compare everything Buffett says, with what Buffett actually does, you almost get disappointed with the hypocrisy. His entire public persona is the opposite of what he does personally.

 

But what has Buffett been doing? Certainly not buying the S&P 500 because it was "so cheap". No, he wasn't buying hardly anything as a matter of fact and that's how he is sitting on $125 billion after years of waiting. Is he sitting on $125 billion because the S&P 500 was cheap relative to interest rates, like he says? Or was he sitting on $125 billion because deals weren't to be found because of how damn expensive we were and a 20-30% decline to average-ish multiples in the middle of a massive recession isn't enough of a correction to warrant buying just yet?

 

So I agree, we hear a lot of folks talking about "worst recession since".... but how is nobody able to differentiate what is extremely obvious? Most recessions, or even depression, happen on their own and are largely unavoidable. This is entirely different than temporarily FORCING everything to stop, and companies to layoff/furlough for the time being. To summarize the sensationalism, I ll point to an example. I saw a headline last week, "biggest wave of unemployment in history!"...and my first thought was, what idiot wrote that headline? The second, not f*** shit, we chose to shut everything down. I guarantee the first day or weeks following things opening back up, we may see the single largest hiring sprees EVA!! Will we get back to normal right away? No, but the sensationalism is just bullshit and a huge distraction.

 

I don't know why the catalyst matters. What matters is the ensuing damage, not what started it. If you shoot yourself in the foot, you still can't walk on it the next day - doesn't matter if it's self-imposed or not. We failed to address the virus early. Now we're embarking on an extremely damaging strategy to contain it to avoid the extremely damaging non-strategy of letting it run its course. The economic damage is real regardless of the catalyst that caused it.

 

Take a simple scenario where we do not have a cure or vaccine for the virus until middle of next year and the virus mutates and becomes more virulent. Is this an improbable scenario? Not to my mind.

 

Then GDP would be at say 70% in Q2, 80-85% in Q3 & Q4. Likely around 90% in first half of 2021. Many banks would have difficulty coming through without severe dilution in this cases.

 

Vinod

what is some other virus that we knew two months back mutated? We live in a world of risks. The risks havent really gone up in the long term.

 

You need to re-read Bayes theorem. You update your model as information becomes known and probabilities are changed. Yes, there was the potential risk of a virus mutation with us all along - a probability that was much less than 100%. Now it's not a risk, it's a reality - probability = 100%. The damage to the economy is no longer a possible nor a hypothetical. It's real damage. Adjust the model accordingly.

[Dalal.Holdings]

Who would want to hold cash? Sounds "irrational"...

 

Some people sound upset that WEB was not aggressive enough with cash which is strange. Look around you. There are so many companies that didn't stock up because "no one could have predicted this crisis" and now they're on life support. What is your "adjusted EBITDA" when >50% of your revenue evaporates??? Companies that "optimize the balance sheet" and don't believe in having excess capacity around are the ones to fall. The ones that keep ample cash are the ones to stand the test of time. That's why it's safe for these guys to not diversify and keep 90% of their wealth in that single stock.

 

$125B in cash is not much for a company Berkshire's size. AAPL is a worse offender, but AAPL mgmt has fewer options with cash.

 

When you manage hundreds of billions of dollars, your investment options dwindle (and so will your returns as Warren and Charlie repeatedly state). I don't think Buffett is hypocritical. He clearly has shown that he has run out of investment options for a while--his investments in airlines and OXY show desperation that there was not much else out there for him. He's broken some of his old rules because his investable field has gotten much smaller. And he's more likely to invest at low PE airline stocks than some SaaS with barely positive "non-GAAP adjusted earnings less stock comp".

[arcube]

Thank you. This is a key post AD and it is lost here in speculative discussion on what WEB and CM are thinking. You listed the businesses that give BRK a lot of insight how this domino effect will happen.

 

Two points I want to make. GEICO has to return some of the premiums and consumption on utilities in U.S. is down as far as I can remember so these may not exactly be the shining spots in BRK as they appear to be.Not sure if GEICO is still spending tons to acuire new customers. Also the recent OXY purchase.

 

Buffett/Munger have a ton of insight into the real economy with the data they see daily from their subsidiaries.  Buffett is close friends with Bill Gates--you know, the guy who resigned from Berkshire's board to work on COVID response.

 

Buffett/Munger have tough days ahead, as they have tons of businesses hard hit:

 

Railroads

Airplane parts manufacturers

Car dealers

Net Jets

Furniture stores

Mobile home makers

Retail candy stores

Stocks in airlines, banks, and Apple, among others

 

The only bright spots are insurance like GEICO, which is likely minting money, and the utilities, which are probably not hurt too badly.

 

Overall though, I think Berkshire is going to have a lot of rough segments and I wouldn't be surprised if there are layoffs across many divisions of the company.

 

Uncle Warren came rushing in to buy in 2008 because nothing was fundamentally broken about most of the economy.  Right now, I don't think that's the case, and one reason I don't think you've seen Buffett buying (in fact, he's been selling at least airlines, which require regulatory disclosure).

[arcube]

When you manage hundreds of billions of dollars, your investment options dwindle (and so will your returns as Warren and Charlie repeatedly state). I don't think Buffett is hypocritical. He clearly has shown that he has run out of investment options for a while--his investments in airlines and OXY show desperation that there was not much else out there for him. He's broken some of his old rules because his investable field has gotten much smaller. And he's more likely to invest at low PE airline stocks than some SaaS with barely positive "non-GAAP adjusted earnings less stock comp".

 

Good points.

[Gregmal]

The guy has numerous times stated he missed GOOG and AMZN, MSFT, etc. There would have been zero reason not to be able to deploy at least some capital during the sell off into those. Personally, I think he probably did. If he didn’t, there’s no excuse about scars from the past or limitations on size...even novice investors saw pretty quickly those businesses would be ok. And many of the pros like Tepper nailed the bottom, almost to the day. Or maybe the greatest investor of all time was just sleeping?

[arcube]

You need to re-read Bayes theorem. You update your model as information becomes known and probabilities are changed. Yes, there was the potential risk of a virus mutation with us all along - a probability that was much less than 100%. Now it's not a risk, it's a reality - probability = 100%. The damage to the economy is no longer a possible nor a hypothetical. It's real damage. Adjust the model accordingly.

 

Well said TCC. Thanks.

 

Some latest data that came from CB LEI below. Bolded by me for emphasis.

WASHINGTON (Reuters) - A gauge of future U.S. economic activity suffered a record decline in March, suggesting the economy could struggle to pull out of a deep slump caused by the novel coronavirus outbreak.

 

The Conference Board said its index of leading economic indicators (LEI) tumbled 6.7% last month, the largest decrease in the series' 60-year history. Data for February was revised down to show the index falling 0.2% instead of gaining 0.1% as previously reported. Economists polled by Reuters had forecast the index dropping 7.0% in March.

 

"The sharp drop in the LEI reflects the sudden halting in business activity as a result of the global pandemic and suggests the U.S. economy will be facing a very deep contraction," said Ataman Ozyildirim, senior director of economic research at The Conference Board in Washington.

 

States and local governments have issued "stay-at-home" or "shelter-in-place" orders affecting more than 90% of Americans to control the spread of COVID-19, the potentially lethal respiratory illness caused by the virus, and abruptly halting economic activity.

 

The slump in the LEI added to a raft of dismal data published this week. At least 22 million people have filed for unemployment benefits in the last four weeks. Retail sales suffered a record drop in March and output at factories declined by the most since 1946.

 

Homebuilding crumbled in March at a speed not seen in 36 years. Economists believe the economy contracted at its steepest pace since World War Two in the first quarter.

 

The Conference Board's coincident index, a measure of current economic conditions, fell 0.9% in March after increasing 0.3% in February. But the lagging index increased 1.2% last month after gaining 0.3% in February.

 

[buffetteer1984]

So the question is, should we continue to look to warren buffet or charlie munger for indications on what to do in markets or is energy better focused on others like his disciples.  Ackman, tepper, hohn, klarman, miller have all said stocks are incredibly cheap and are buying.  Most of these guys have also outperformed berkshire over the past decade.

 

 

I'm shocked that people still listen to what Buffett says and ignore what he does. Buffett's advice on television is for grandmothers who don't know anything about stocks. If you compare everything Buffett says, with what Buffett actually does, you almost get disappointed with the hypocrisy. His entire public persona is the opposite of what he does personally.

 

But what has Buffett been doing? Certainly not buying the S&P 500 because it was "so cheap". No, he wasn't buying hardly anything as a matter of fact and that's how he is sitting on $125 billion after years of waiting. Is he sitting on $125 billion because the S&P 500 was cheap relative to interest rates, like he says? Or was he sitting on $125 billion because deals weren't to be found because of how damn expensive we were and a 20-30% decline to average-ish multiples in the middle of a massive recession isn't enough of a correction to warrant buying just yet? I don't know why the catalyst matters. What matters is the ensuing damage, not what started it. If you shoot yourself in the foot, you still can't walk on it the next day - doesn't matter if it's self-imposed or not. We failed to address the virus early. Now we're embarking on an extremely damaging strategy to contain it to avoid the extremely damaging non-strategy of letting it run its course. The economic damage is real regardless of the catalyst that caused it.

 

 

 

[nickenumbers]

The guy has numerous times stated he missed GOOG and AMZN, MSFT, etc. There would have been zero reason not to be able to deploy at least some capital during the sell off into those. Personally, I think he probably did. If he didn’t, there’s no excuse about scars from the past or limitations on size...even novice investors saw pretty quickly those businesses would be ok. And many of the pros like Tepper nailed the bottom, almost to the day. Or maybe the greatest investor of all time was just sleeping?

 

Preach it, Gregmal!  And GOOG, AMZN and MSFT [maybe a few others] in the midst of the crisis would have been great additions and places to dump $30B real easy.  100% Agree

[Gregmal]

+1 on that buffetteer1984. Others have clearly surpassed him and its a sorry state when the best deals, while also the only deals, he can muster are garbage like OXY... Would have just been better off buying SPY or QQQ. Which ironically enough, is often his advice he gives to everyone else. And I say this with BRK about an 8% position. I dont mean to shit on him, but my bullshit detector has been going off for a while here and this recent downturn to me is make or break for determining where this guys head is really at. There's no excuse if he didn't at the least, buy back some stock and pick up some of the easy stuff. I believe he did.

[tng]

I think the weird thing about this market crash and recession is that it has the potential to destroy many businesses that people have always thought were safe. Berkshire Hathaway has a different risk profile than individual investors because the government is willing to write checks to those that have lost their jobs so they don't have to liquidate their assets at fire-sale prices while many businesses are racking up losses and debts that they might never be able to pay back. The market itself is not down too much in total, but there has been a huge reshuffling of valuations as some businesses will almost certainly die while others are huge beneficiaries (ex: everybody spending their government checks on Netflix because they can't go outside). I think Berkshire, because of all its operating businesses, needs to be more conservative while individual investors can afford to be more aggressive.

[CorpRaider]

Not a ton of room for BRK to back up the truck on banks.  They are already near the top of shareholder roles for like 8 big banks.  Munger couldn't really get more concentrated in banks in DJCO without hiring some tellers.  I don't think there's a big rush.  He did the BAC deal in 2011.  This thing drags out, I could see him bagging Disney as a distressed seller or something crazy.

 

Also agree with you guys that Munger really is probably only speaking for himself. 

[TwoCitiesCapital]

So the question is, should we continue to look to warren buffet or charlie munger for indications on what to do in markets or is energy better focused on others like his disciples.  Ackman, tepper, hohn, klarman, miller have all said stocks are incredibly cheap and are buying.  Most of these guys have also outperformed berkshire over the past decade.

 

 

I'm shocked that people still listen to what Buffett says and ignore what he does. Buffett's advice on television is for grandmothers who don't know anything about stocks. If you compare everything Buffett says, with what Buffett actually does, you almost get disappointed with the hypocrisy. His entire public persona is the opposite of what he does personally.

 

But what has Buffett been doing? Certainly not buying the S&P 500 because it was "so cheap". No, he wasn't buying hardly anything as a matter of fact and that's how he is sitting on $125 billion after years of waiting. Is he sitting on $125 billion because the S&P 500 was cheap relative to interest rates, like he says? Or was he sitting on $125 billion because deals weren't to be found because of how damn expensive we were and a 20-30% decline to average-ish multiples in the middle of a massive recession isn't enough of a correction to warrant buying just yet? I don't know why the catalyst matters. What matters is the ensuing damage, not what started it. If you shoot yourself in the foot, you still can't walk on it the next day - doesn't matter if it's self-imposed or not. We failed to address the virus early. Now we're embarking on an extremely damaging strategy to contain it to avoid the extremely damaging non-strategy of letting it run its course. The economic damage is real regardless of the catalyst that caused it.

 

Watch what he does. Ignore what he says. And watch others like Tepper if you're curious about shorter-term, sentiment driven moved because that man seems to read the market like a book.

[skanjete]

It's very dangerous to try to shrug off Munger's and probably Buffett's prudence or conservatism as a consequence of their age or personal financial needs  or even legacy.

 

If the situation would call for it, I am certain they would swing for the fences. Look at what Buffett did in september 2008 or Munger in March 2009. All-in in a very short period of time.

 

I agree with them that the right time for investment hasn't come yet. The risk/reward just isn't there. A few weeks ago we had a low point, and some traders thought there was a good trade to be made, and they did, but Buffett and Munger aren't traders. They buy to keep. And from that perspective, the time to buy hasn't come yet.

 

I've lived through quite a few cycles, and have never seen a true bottom with market sentiment as it is right now. I get constantly phone calls from people who have zero experience in the stock market with questions how they can and in what they have to invest. Brokers can't handle the applications from small investors and I read a broker had to cancel 40% of the applications because the appliers didn't have the necessary knowlegde to open an account. At a true bottom, almost nobody, and certainly no amateurs are interested in stepping in.

 

I mean, look at the S&P500. About 10% lower YTD. I can't comprehend this. The economic damage is real. Talk to a business owner instead of a stock trader and you get a real view of what is happening. There is an enormous value destruction going on, and no Fed or government is going to compensate this.

 

It's a simple fact that people in lockdown aren't producing any output anymore. That output is gone forever and won't be compensated, no matter how much money they print. Millions of people and businesses are surviving right now by eating up their reserves. These reserves are gone and not available anymore to consume or to invest after the crisis. The compounding effect in the economy is working in reverse at the moment, and it is not that easy to turn it around again. So I think the economic consequences will be felt long after the virus has been contained.

 

In these circumstances, a 10% correction from the rosy times earlier this year look a little paltry. Besides, I can't image a bull market of more than 10 years stops with a crash of 35%, only to resume 4 weeks thereafter. The imbalances are not cleansed out of the system. Look at Tesla : everything comes to a standstill, but the share price is up 70% YTD?

 

So we have time to see this thing evolve. There's certainly no need to rush in and the true long term opportunities will come. In this, I am completely on Munger's page. 

 

[Guest]

The guy has numerous times stated he missed GOOG and AMZN, MSFT, etc. There would have been zero reason not to be able to deploy at least some capital during the sell off into those. Personally, I think he probably did. If he didn’t, there’s no excuse about scars from the past or limitations on size...even novice investors saw pretty quickly those businesses would be ok. And many of the pros like Tepper nailed the bottom, almost to the day. Or maybe the greatest investor of all time was just sleeping?

 

I like Tepper but saying that it's okay to nibble isn't exactly calling a bottom. Unless there is something I'm missing that he said?

[scorpioncapital]

One peculiar feature we see today is massive government involvement in supporting the economy. It is literally helicopter money. This crowds out investment opportunity from Berkshire for bailouts. Of course he could just buy good equities at lower prices. I hope he was at least nibbling. But if you believe they won't be able to unwind the helicopter money after the pandemic passes , then I'm not sure Berkshire is right not to be buying into potentially ruinous Interest rates to come. Then he can buy bonds for high yield and even stocks at the same price or lower than today.

[UK]

The guy has numerous times stated he missed GOOG and AMZN, MSFT, etc. There would have been zero reason not to be able to deploy at least some capital during the sell off into those. Personally, I think he probably did. If he didn’t, there’s no excuse about scars from the past or limitations on size...even novice investors saw pretty quickly those businesses would be ok. And many of the pros like Tepper nailed the bottom, almost to the day. Or maybe the greatest investor of all time was just sleeping?

 

I like Tepper but saying that it's okay to nibble isn't exactly calling a bottom. Unless there is something I'm missing that he said?

 

https://www.cnbc.com/2020/04/08/cramer-says-he-and-david-tepper-confused-by-the-market-recent-rally.html

 

“I spoke to Dave Tepper yesterday and we were both kind of marveling, ‘Jeez it’s been bullish. Why?’”

 

[elliott]

given the decline, and the recovery we have had, it is just normal that there will be people unhappy with Buffett and Munger for not having made significant purchases

 

but what would happen if they had made purchases and the markets were to decline again? I bet there will also be people unhappy precisely because they made purchases (how could they? the economy has been hit too hard, it was obvious!)

 

now the funny thing: many of the people in the first group will also be in the second one

[Guest]

I'll say that Buffett has beaten Klarman and Miller by a pretty large margin over the past 10 years. I'm quite sure of that. Klarman has been bearish since at least 2010. Why March of 2020 presents better bargains than any other month in the past 10 years? Beats me.

 

And Miller had a large stretch of luck but I don't think is an elite investor. Why do I say that? He barely beat the S&P 500 over his entire tenure if you go from inception to his exit (after fees). And that is with a ton of extra volatility. To be fair, the fund is expensive so he had a pretty high hurdle to start off with.

 

He started on April 16th, 1982. If you run the numbers from June 30th 1982 -April 30th 2012 (his last day from what I can find) he underperformed the S&P 500. If you can go almost 30 years and underperform, what's the point? And he had worse drawdowns! An elite investor doesn't take on more risk and have worse returns.