Author Topic: What happens if markets donít crash soon?  (Read 2246 times)

CorpRaider

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Re: What happens if markets donít crash soon?
« Reply #10 on: November 21, 2019, 07:34:53 AM »
He could just do a special dividend; doesn't have to create any expectation of recurrence.  I think having a lot of cash around may seem real smart if and when management changes.  A lot of people might panic out and big buybacks could be just the move.  Also, I've read cogent arguments that the cash size needs to be evaluated relative to the size of the float/balance sheet and focus on a nominal figure is not the best way to think about it.
« Last Edit: November 21, 2019, 07:36:57 AM by CorpRaider »


CassiusKing1

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Re: What happens if markets donít crash soon?
« Reply #11 on: November 21, 2019, 07:50:32 AM »

SwedishValue

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Re: What happens if markets donít crash soon?
« Reply #12 on: November 21, 2019, 09:08:27 AM »
Iím not suggesting Buffett should swing for things he doesnít understand or swing for things without margin-of-safety. Iím suggesting he should swings for the things he believes presents a margin of safety.

In addition to this, Iím posing the question if fellow shareholders are fine with ANY amount of wait. I am fine with it, as long as he swings when he gets the opportunity. However I feel like I, as a shareholder, deserve to know why he preferred waiting and allocating to cash, rather than buying more JPM and BRK stock when he believed both were undervalued and he had 20% of the market cap available in excess cash yielding historically low rates.

woodstove

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Re: What happens if markets donít crash soon?
« Reply #13 on: November 21, 2019, 11:19:19 AM »
Like most on this board, I am interesting in understanding why Mr. Buffett makes his (usually good) decisions.  However, I think it is a hazard if we ask him too much about his reasons, and especially if we get hung up on inconsistencies between explanations and actions.  He is essentially an artist, who has developed an understanding of business operations and valuations and their reflection via the markets, over many decades, to the point that he can usually make a yes/no/pass decision in maybe an hour when presented with an opportunity and the relevant data.  He may not understand all of the process, from opportunity and data to decision, himself.  My concern is that shareholder inquiries may cause him to anchor on his explanations, to do an expected action instead of the right one, or to pass on what seems right because it does not conform to previously stated standards (eg, famously, no airlines). 

A comparison -- on Gutenberg, there is a book by Rodin, entitled Art.  It was written by a friend of his, who visited Rodin regularly and discussed how he worked, how he made choices.  Most of the book is usual, though not uninteresting, but the last three chapters are outstanding.  Rodin says to his friend, come next time and I will show you.... The next visit, Rodin takes a lump of clay, makes a figure in the classical greek style, then makes another figure in Michaelangelo's style, and discusses the planes in the figures, the methods of capturing balance and motion.  Neither of which is Rodin's method, and the explanations he gives are not what Rodin or his colleagues exactly do, but it is interesting and instructive, even to a non-sculptor like me.  I would not want Rodin, through an excess of accomodation to his friend's curiosity, to change his manner of working.  A fascinating discussion of art, especially for me as I am a Rodin enthusiast.  But back to Buffett...

If one should figure out how Buffet makes investing decisions, it would be best, to benefit other shareholders, to keep it to oneself.  In fairness to the majority of shareholders, Buffett should keep his decision process to himself, except for appropriate interaction with colleagues.  We either trust him and the Berkshire team or we do not.  Let the guy work.




Gregmal

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Re: What happens if markets donít crash soon?
« Reply #14 on: November 21, 2019, 11:26:53 AM »
Like most on this board, I am interesting in understanding why Mr. Buffett makes his (usually good) decisions.  However, I think it is a hazard if we ask him too much about his reasons, and especially if we get hung up on inconsistencies between explanations and actions.  He is essentially an artist, who has developed an understanding of business operations and valuations and their reflection via the markets, over many decades, to the point that he can usually make a yes/no/pass decision in maybe an hour when presented with an opportunity and the relevant data.  He may not understand all of the process, from opportunity and data to decision, himself.  My concern is that shareholder inquiries may cause him to anchor on his explanations, to do an expected action instead of the right one, or to pass on what seems right because it does not conform to previously stated standards (eg, famously, no airlines). 

A comparison -- on Gutenberg, there is a book by Rodin, entitled Art.  It was written by a friend of his, who visited Rodin regularly and discussed how he worked, how he made choices.  Most of the book is usual, though not uninteresting, but the last three chapters are outstanding.  Rodin says to his friend, come next time and I will show you.... The next visit, Rodin takes a lump of clay, makes a figure in the classical greek style, then makes another figure in Michaelangelo's style, and discusses the planes in the figures, the methods of capturing balance and motion.  Neither of which is Rodin's method, and the explanations he gives are not what Rodin or his colleagues exactly do, but it is interesting and instructive, even to a non-sculptor like me.  I would not want Rodin, through an excess of accomodation to his friend's curiosity, to change his manner of working.  A fascinating discussion of art, especially for me as I am a Rodin enthusiast.  But back to Buffett...

If one should figure out how Buffet makes investing decisions, it would be best, to benefit other shareholders, to keep it to oneself.  In fairness to the majority of shareholders, Buffett should keep his decision process to himself, except for appropriate interaction with colleagues.  We either trust him and the Berkshire team or we do not.  Let the guy work.

I definitely agree with a lot of this perspective. I often laugh to myself at how hypocritical even myself can feel sometimes with various investments and angles because it is an art and something that is highly personal. Your framework for investing can be everything while also being nothing. It can be exact and also inexact. Something sometimes and nothing sometimes. It really does vary situation to situation. Just because something is the same as something that has worked before, doesnt mean that this time it won't be different, and vice versa.

scorpioncapital

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Re: What happens if markets donít crash soon?
« Reply #15 on: November 21, 2019, 12:05:14 PM »
Just look at your own portfolio. Do you go max aggressive? What if you're wrong? I gave up lots of gains by diversifying into say 10 major positions instead of 5 , and the ones I thought might do well sometimes did very well. Others didn't. It would be reckless to go max, especially if you have another asset in the field. E.g JPM when you got a ton of WFC and BAC and a ton of insurance cos which are also in the financial sector. Will you give up max return? Of course. But it's risk-adjusted return. And risk is the invisible variable. Seldom visible like a stock price.

DooDiligence

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Re: What happens if markets donít crash soon?
« Reply #16 on: November 21, 2019, 03:16:46 PM »
If one owns a slab of the Rock of Gibraltar, there is little point complaining it makes a lousy surfboard.

I like what is called a Barbell portfolio -- instead of same-as average/middle (S&P Index?), balance positions of extreme safety (BRK?) and volatile upside/downside (petro-energy?).  If want excitement, surf on weekends, enjoy comfortable home/work life on weekdays.

Nowadays there is extreme volatility in contexts, so it makes sense for BRK to be prepared for opportunities.  Also to mention primary obligation, to preserve ability to pay out on insurance claims, and secondary obligations, to preserve capital of bondholders and shareholders.

A little FOMO cash is a good thing in the right hands.

We'll see what results from glacial patience.
Healthcare 20.9% - EW NVO // BRK.B - 22.7% // Auto's & Oil 14.7% - CLB GPC VDE

Banking 10.2% - WFC // Entertainment 4.8% - DIS // Drinkers & Smokers 7.0% - MO

Retail 1.5% - ULTA

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%'s held @ MV 11/29/2019 minus 18.2% investable cash

i trumpet my ignorance

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