No. of Recommendations: 15
While I'm as popular here as spoiled milk I'll indicate where I stand as to the cycle, Trump Trade, and valuation. Not that I'm good at timing or not that I take myself too seriously either. But basically I sold every single thing I could that wouldn't engage in a big tax bill, but also today I sold things like Apollo too which I'd bought in 2012. Still own BX, bought during Covid, but working on the mental acceptance of selling it early 2025.
Interestingly given I've owned the railroads for decades, NSC back to 1976, last night Jim Cramer interviewed the CEO of CSX (he often interviews whoever is with CSX). I love watching Cramer. No I do not invest from that observation, but I am 70 and without some work towards keeping up in the world, I just would go down the tube of ignorance and slow brained decline. Watching Cramer and CNBC intermittently is how I keep up with the "names" and changes that roar through this world. Most people my age, even those I spent decades discussing investments with, just shut down even before my age. Online is where I can keep going.
But Cramer's interview had the CSX CEO in serious steroid sales mode, he says, "All this inevitable phenomenal growth-to-come on this completely stagnant economy goes right through the railroads and..." Well, the guy was literally euphoric. And so was Ward (CEO of CSX) back 10 or so ago before his stock didn't do well. I own a lot of CSX, and I'm not selling, but...
I've never seen Wall Street analysts and CEO's as unified euphoric as they are today. Back in the 1990's, the late 1990's, you did have doubters. The go-go types dominated the media houses like CNBC but there were outspoken doubters - big money managers who did have huge doubts. Today the euphoria may be less for the go-go types, but the percentage of those sure of the TT and its magnificent changes that are going to surely ramp through our world is really shockingly positive and just almost unanimous.
Same bunch stating the economy is terrible...just soon to go upside big time. I do find this to be truly an amazing news cycle.
The popularity of disruption today, disruption of all things, is also something I find stimulating. Everyone wants disruption, but all at the same time expect their benefits and privileges to sustain...actually I'd say most want/expect their advantages to increase. Is this how it works? Life is great...if we can stand it!
This will be an interesting time, soon to come interesting time, in my view.
No. of Recommendations: 7
I too noticed a nearly UNANIMOUS bullish outlook the past days. If I recall correctly, during Trump 1.0, there was all sorts of skeptism, reistance and and doubt. There was not a unified consensus that Trump would grow the economy. (the economy is strong at the moment by all quantitative measures) The wall of worry was strong and prominent in the rally of 2016. Very different than the cheerleading of Wall St now.
One could argue there has been a wall of worry under Biden and look how the market has performed. No one will mention this but SP500 gained 82% under Biden to 70% under Trump (despite the poor sentiment, fearmongering about socialism, and calls of an unfriendly business environment)
In addition, SP500 was at ca. 16X earnings in 2016, as opposed to 22+X earnings. Two completely different valuation landscapes.
https://yardeni.com/charts/stock-market-p-e-ratios...Sure the tax breaks will increase earnings and degregulation can juice the economy, but it seems this time around there is a very different and euphoric vibe to nearly all market analysts.
One final point. Tarriffs were put in place in 2018, not 2016. The chart from 2016-2018 is much different than 2018-2020.
No. of Recommendations: 16
I've never seen Wall Street analysts and CEO's as unified euphoric as they are today...
Even, dare I say it, a bit with Berkshire.
Great company, but I don't personally expect much of a return from it in the short term, edging towards the medium term.
Super short reasoning:
20 year average P/B is just a hair under 1.40
Current price of a B share is about $470, giving P/B 1.611, so it is 15.3% "ahead of itself" compared to the usual.
Value per share has risen at a number very close to inflation + 8%/year for a very long time. That's likely a hair optimistic going forward, but let's go with it.
So, if the future growth rate and P/B resembled the past for the next while (big ifs but not unreasonable), the real price would be unchanged 1.85 years from now.
Unusually, T-bills have a positive real return right now. The market implied forecast for rates middle of next year has risen about 1% lately.
Jim
(relatively low on BRK positions, relatively high allocation to bills)
No. of Recommendations: 2
LOL, the only side mention is that with this tad of negative view I'm still about 95% invested in equities.
