I'm sure most of you'll have seen the news. You probably also saw that Friday was pretty damn bad for stocks, as has been the whole of July.
Starting from his latest shareholder letter, I can't shake the thought that he's gearing for a crash. Points from the 2023 shareholder letter (bolding is my own):
"Such instant panics won’t happen often – but they will happen. Berkshire’s ability to immediately respond to market seizures with both huge sums and certainty of performance may offer us an occasional large-scale opportunity"
He has huge sums at hand, has had for years but the Apple sale made them even bigger.
"I believe Berkshire can handle financial disasters of a magnitude beyond any heretofore experienced. This ability is one we will not relinquish. When economic upsets occur, as they will, Berkshire’s goal will be to function as an asset to the country – just as it was in a very minor way in 2008-9 – and to help extinguish the financial fire rather than to be among the many companies that, inadvertently or otherwise, ignited the conflagration."
"Your company also holds a cash and U.S. Treasury bill position far in excess of what conventional wisdom deems necessary. During the 2008 panic, Berkshire generated cash from operations and did not rely in any manner on commercial paper, bank lines or debt markets. We did not predict the time of an economic paralysis but we were always prepared for one. "
Indeed Buffett helped stabilise the situation in 2008-2009, there's a famous interview where he glosses over how AIG and Lehman Brothers came begging for help, and didn't get it, while the interview does not say that Goldman Sachs also did, got help, and Buffett got a super sweet deal out of it.
In the same letter he makes the point that there are very few companies that can move the needle for Berkshire, and those that could have been "endlessly picked over by them and others". That could change in a crash. Perhaps he's setting himself up for a last hurrah, or setting up his successors for success, or both. Of course this is Buffett, every word he's said the last 30+ years has also been "endlessly picked over", he knows that too, so it's naive to think his letters aren't carefully written - there's economy in the writing, I have read many of the past letters too and while the tone and style is the same, there doesn't seem to be any clear messaging, just a bit about numbers, a bit of Omaha reverence, some history/anecdote about a company/deal/person, reiterating how critical (re)insurance is and how lucky he was that Ajit Jain walked in one day in 1986 and performance vs the S&P500, whereas this time there were specific messages.
In any case, as a very very small investor all I can think is "brace brace", do nothing rather than holding fast, and lament the fact my own BRK.B position is so small, however the plan is to always add to it, likely leave to my kids.
Edit: of course this could well be a small correction, and I could be reading too much into it because I am new to investing, but my gut tells me "old man called the top, it's going to go downhill soon".
Edit 2: seems in investment fora and other communities many people are defecating themselves, looking into fixed income, thinking of selling etc, the fact of the matter is that when tech stocks have been priced to not just meet, not just beat but SMASH expectations I can expect many toys being thrown out of many prams the second this doesn't happen. And it can't happen for ever.
Edit 3: a nice quote is "money is made in bull markets, fortunes are made in bear markets" and "be greedy when others are fearful and fearful when others are greedy" (from Buffett - what characteristics does he himself show now?).
Starting from his latest shareholder letter, I can't shake the thought that he's gearing for a crash. Points from the 2023 shareholder letter (bolding is my own):
"Such instant panics won’t happen often – but they will happen. Berkshire’s ability to immediately respond to market seizures with both huge sums and certainty of performance may offer us an occasional large-scale opportunity"
He has huge sums at hand, has had for years but the Apple sale made them even bigger.
"I believe Berkshire can handle financial disasters of a magnitude beyond any heretofore experienced. This ability is one we will not relinquish. When economic upsets occur, as they will, Berkshire’s goal will be to function as an asset to the country – just as it was in a very minor way in 2008-9 – and to help extinguish the financial fire rather than to be among the many companies that, inadvertently or otherwise, ignited the conflagration."
"Your company also holds a cash and U.S. Treasury bill position far in excess of what conventional wisdom deems necessary. During the 2008 panic, Berkshire generated cash from operations and did not rely in any manner on commercial paper, bank lines or debt markets. We did not predict the time of an economic paralysis but we were always prepared for one. "
Indeed Buffett helped stabilise the situation in 2008-2009, there's a famous interview where he glosses over how AIG and Lehman Brothers came begging for help, and didn't get it, while the interview does not say that Goldman Sachs also did, got help, and Buffett got a super sweet deal out of it.
In the same letter he makes the point that there are very few companies that can move the needle for Berkshire, and those that could have been "endlessly picked over by them and others". That could change in a crash. Perhaps he's setting himself up for a last hurrah, or setting up his successors for success, or both. Of course this is Buffett, every word he's said the last 30+ years has also been "endlessly picked over", he knows that too, so it's naive to think his letters aren't carefully written - there's economy in the writing, I have read many of the past letters too and while the tone and style is the same, there doesn't seem to be any clear messaging, just a bit about numbers, a bit of Omaha reverence, some history/anecdote about a company/deal/person, reiterating how critical (re)insurance is and how lucky he was that Ajit Jain walked in one day in 1986 and performance vs the S&P500, whereas this time there were specific messages.
In any case, as a very very small investor all I can think is "brace brace", do nothing rather than holding fast, and lament the fact my own BRK.B position is so small, however the plan is to always add to it, likely leave to my kids.
Edit: of course this could well be a small correction, and I could be reading too much into it because I am new to investing, but my gut tells me "old man called the top, it's going to go downhill soon".
Edit 2: seems in investment fora and other communities many people are defecating themselves, looking into fixed income, thinking of selling etc, the fact of the matter is that when tech stocks have been priced to not just meet, not just beat but SMASH expectations I can expect many toys being thrown out of many prams the second this doesn't happen. And it can't happen for ever.
Edit 3: a nice quote is "money is made in bull markets, fortunes are made in bear markets" and "be greedy when others are fearful and fearful when others are greedy" (from Buffett - what characteristics does he himself show now?).
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