Invest your own money, let compound interest be your leverage, and avoid debt like the plague.
- Manlobbi
Investment Strategies / Falling Knives
No. of Recommendations: 5
No. of Recommendations: 5
But why would Buffett needs to sell BAC/Apple to raise money before even knowing Chubb is willing to sell..
No. of Recommendations: 14
But why would Buffett needs to sell BAC/Apple to raise money before even knowing Chubb is willing to sell..
Yeah. My theory is simpler. It’s the “Coke” theory: “I should have sold when Coca Cola was so high.” Both BAC and Apple are “so high”. Maybe wonderful businesses, but that doesn’t mean you should hold them through extended periods when the business fundamentals need to catch up to the stock price. Cash is not a terrible place to be, short-to-medium term.
No. of Recommendations: 0
That makes more sense I suppose.
No. of Recommendations: 5
https://archive.ph/WboyOPosting the SA article in a readable format.
It's certainly interesting given some of the commentary from Tom Gayner.
Greenberg is 69 and Ajit is 73 so not so sure if that's the reason for acquiring Chubb to have an insurance CEO successor at Berkshire.
No. of Recommendations: 3
I would have to believe that Joe Brandon is on a short list to succeed Ajit should he decide to retire.
No. of Recommendations: 3
Greenberg is 69 and Ajit is 73 so not so sure if that's the reason for acquiring Chubb to have an insurance CEO successor at Berkshire.
I didn't realize Evan was that old - it prompted me to look up his dad - is he still working at 99 years old ??!
No. of Recommendations: 6
Yeah. My theory is simpler. It’s the “Coke” theory: “I should have sold when Coca Cola was so high.” Both BAC and Apple are “so high”.
I think the reason for selling BAC is different than the reason for selling AAPL. I think the reason for selling BAC is mainly due to a belief that it isn't the best run bank [anymore] and when NIM starts to shrink, all banks will suffer, but BAC will suffer more than average because they aren't the best run kind of bank. And the reason for selling AAPL? I think it is as simple as it just became too large a portion of the portfolio, and that meant that Berkshire was too heavily levered to the price of Apple stock. And while Berkshire has never been afraid to put 10% of itself into a strong investment, I believe they (Buffett, Munger MHRIP, Abel, etc) all thought that 20+% is just too much.
No. of Recommendations: 11
And while Berkshire has never been afraid to put 10% of itself into a strong investment, I believe they (Buffett, Munger MHRIP, Abel, etc) all thought that 20+% is just too much.
I have heard a rumour that Amex reached about 40% of the Buffett Partnership portfolio, and that in the 1968 letter Mr Buffett even mentioned that that was their limit on position size.
Anyone able to check that?
Personally I think there is a simple one word answer to trimming the Apple position size: "China". That is just a guess, of course. The good price merely made that an easy call to make.
And also consider the bold section of this quote:
“I don’t mind at all, given current conditions, building a cash position. When I look at the equity markets and the composition of what’s going on in the world, we find it quite attractive.”
Jim
No. of Recommendations: 2
I think there is a simple one word answer to trimming the Apple position size: "China".
It is indeed possible that China has something to do with it. But that brings up an important question - is it prudent to invest $88B in a company that you believe is about to have a China problem? And to have it be the largest position of all in the portfolio? And not just the largest, but more than twice as large as the second largest position?
No. of Recommendations: 3
40% seems correct:
“Once it was apparent that the situation was manageable and that the underlying business was unaffected, the AMEX stock started to recover. AMEX was a big position for the Buffett Partnership at once the stock started to appreciate it grew to 40% of the total portfolio. As Buffett was proven right, he started exited the AMEX position. It had taken five years to play out.
On January 24, 1968, Buffett wrote to his shareholders: “Last year I referred to one investment which substantially outperformed the general market in 1964, 1965 and 1966 and because of its size (the largest proportion we have ever had in anything – we hit our 40% limit) had a very material impact on our overall results and, even more so, this category. This excellent performance continued throughout 1967 and a large portion of total gain was again accounted for by this single security. Our holdings of this security have been very substantially reduced and we have nothing in this group remotely approaching the size or potential which formerly existed in this investment.”
https://fundamentalfinanceplaybook.com/histories/t...
No. of Recommendations: 8
Could it have something to do with an expectation that capital gains taxes might be higher next year (probabalistic political environment giving a finite expected value)?
Couple this to the high price at time of sale and the ability to have significant cash on hand if the market takes a sudden dip due to Fed rates vs. potential recession and the sales make a great deal of sense. If push comes to shove and prices drop for Apple, the stock can easily be reaquired next year.
Jeff
