Author Topic: Buffett AGM Comments  (Read 13931 times)

Nomad

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Buffett AGM Comments
« on: May 02, 2020, 06:43:39 PM »
I just finished watching the Berkshire AGM livestream. My overall takeaway is that Buffett is very cautious, if not outright bearish, on the near-term prospects of the stock market. Some highlights below (mistakes and omissions are my own):

  • WEB sees the US currently at "DEFCON 5" on the health impact of the coronavirus but only at "DEFCON 1" on the economic and market impact - seemed surprised by the disconnect
  • Range of possible outcomes on the economic side is still "extraordinarily wide"
  • Pointed out that the Dow fell from 381.17 on 1929-09-03 to 198.69 on 1929-11-13, but rose to 240.42 by 1930-08-29 - it was "not apparent" by the summer of 1930 that the US would enter the Great Depression
  • Mentioned the lasting psychological impact of the Great Depression - two lost decades in stocks before the market went back to even in nominal terms
  • WEB: "You can bet on America, but you have to be careful in how you bet."
  • You will do fine if you buy an index and hold for "20 to 30 years"
  • $6b in Berkshire net equity sales in April, all airline positions liquidated
  • On overcapacity in airline industry - there are "too many planes"
  • Unlike 2008, Berkshire has not acted as a lender of last resort because WEB "hasn't seen anything attractive"
  • WEB: Companies were able to get money from the Fed in 2020 "on terms we wouldn't have given them"
  • Sees possible permanent impairment in commercial real estate due to work from home programs
  • Believes there could be "extreme consequences" from abnormally low or negative interest rates
  • Did not buy back Berkshire stock because he did not see BRK at a discount to intrinsic value

Overall, some very interesting comments by Buffett and Greg Abel about the challenges currently facing the country and Berkshire's operating businesses as the pandemic persists.


sleepydragon

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Re: Buffett AGM Comments
« Reply #1 on: May 02, 2020, 07:00:02 PM »
Feel Very bearish to me..


DanielGMask

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Re: Buffett AGM Comments
« Reply #2 on: May 02, 2020, 07:18:09 PM »
I also think he is more bearish than usual. I’ll add that he stated that it’s a mistake to see the 125B in cash as 40% of funds, since even though we have 180B invested in public entities, there’s more invested in wholly owned businesses.
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clutch

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Re: Buffett AGM Comments
« Reply #3 on: May 02, 2020, 07:29:44 PM »
The depression story hit home for me. Maybe we won't get another big dip again, but the market could be stuck at around the current level for a prolonged period of time... 

spartansaver

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Re: Buffett AGM Comments
« Reply #4 on: May 02, 2020, 07:46:27 PM »
It was my favorite annual meeting. I wasn't sure how much clarity he would give us into his thoughts, but I thought he shared the perfect amount. This is one of the most unusual times in our history, and this just adds to the list of people who describe this situation in a unique way. I found his heavy emphasis on the great depression very interesting. It seemed like a way of saying, "be extremely careful, buying this rise could be like buying right before the rise going into the depression." It had a very somber tone to the meeting, but was very illuminating on how well he can think through a range of possibilities. He's the GOAT, and I will forever be grateful for all of the wisdom he's shared. Always great seeing Whitney Tilson ;)

Spekulatius

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Re: Buffett AGM Comments
« Reply #5 on: May 02, 2020, 08:58:19 PM »
I liked this annual meeting too Less frills, more substance.

I also noticed how long he dwelled on the Great Recession. And while he said, “Don’t bet against America, he didn’t bet on American stocks either. As always, watch what they do more so than what they say. In Buffets case it’s actually quite congruent.
« Last Edit: May 03, 2020, 06:25:28 AM by Spekulatius »
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SHDL

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Re: Buffett AGM Comments
« Reply #6 on: May 02, 2020, 09:19:30 PM »
That was much better than expected. He sounded well and sharp, questions were well selected, we even got one from Bill Murray.

I too heard a lot of bearish dog whistle. Especially that remark about him not wanting to talk about certain scenarios because he thinks he might increase the probability of them materializing if he does...

Meanwhile many of the media headlines are (predictably) upbeat:

- WSJ: Warren Buffett Says ‘American Magic’ to Overcome Virus Uncertainty
- CNBC: Buffett says economy will beat virus: ‘Nothing can basically stop America’
- USA Today: Buffett tells investors to 'Bet on America,' buying stocks for long-term gain

The market reaction to this should be fun to watch.

spartansaver

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Re: Buffett AGM Comments
« Reply #7 on: May 02, 2020, 10:29:45 PM »
That was much better than expected. He sounded well and sharp, questions were well selected, we even got one from Bill Murray.

I too heard a lot of bearish dog whistle. Especially that remark about him not wanting to talk about certain scenarios because he thinks he might increase the probability of them materializing if he does...

Meanwhile many of the media headlines are (predictably) upbeat:

- WSJ: Warren Buffett Says ‘American Magic’ to Overcome Virus Uncertainty
- CNBC: Buffett says economy will beat virus: ‘Nothing can basically stop America’
- USA Today: Buffett tells investors to 'Bet on America,' buying stocks for long-term gain

The market reaction to this should be fun to watch.

I skimmed that article after the meeting. I couldn't believe the spin it took on the meeting. The WSJ watched a very different meeting than the one I saw.

Viking

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Re: Buffett AGM Comments
« Reply #8 on: May 02, 2020, 10:45:51 PM »
His comment about not understanding the impact of negative interest rates was also very clearly stated. He said understanding the impact of negative interest rates is likely THE most important economic question of our time. (The reason it is so important is we do not know).

He then punted the question to Greg who quickly agreed with Buffett.

mattee2264

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Re: Buffett AGM Comments
« Reply #9 on: May 03, 2020, 05:15:31 AM »
 Good summary Nomad. I think it was very significant that Buffett referred to the option value of money and it ties in which his earlier comment that there was still a very wide range of economic outcomes. My interpretation is he feels the option value of having cash has gone up significantly.

 I think that is a very interesting way of thinking especially as most investors assume that cash has a static value and therefore whenever stocks decline 20% they assume that stocks have automatically become a lot more attractive relative to holding cash.