No. of Recommendations: 13
Interesting opinion piece on WEB being a $23 BN net seller, few buybacks (watch what he does not what he says) and waiting for a market correction of c40% to come 2024 based on risk free rate??? Unknown.
Who knows? According to the pundits Buffett has been "waiting for a crash" for over a decade.
When we had a genuine crash (2020) he was a net seller, wasn't he? (watch what he does...)
Anyway, Berkshire doesn't actually have more cash than usual compared to float or assets.
Here's Cash and Fixed Income as a percentage of float:
Year (Cash+Fixed)/Float
2010 105%
2011 92%
2012 100%
2013 94%
2014 101%
2015 99%
2016 102%
2017 109%
2018 105%
2019 111%
2020 113%
2021 109%
2022 92%
2023-3 104%
Berkshire is about 80% equities (stocks & businesses) and 20% cash. Has been for a long time now.
2/24/2020 WEB Squawk Box: "So, we’re about 80% in-- roughly in equities and about 20% in cash"
Taking 1.55x book as a proxy for value:
Year (Cash+Fixed)/Value
2010 28%
2011 25%
2012 25%
2013 21%
2014 23%
2015 22%
2016 22%
2017 23%
2018 24%
2019 22%
2020 23%
2021 20%
2022 20%
2023-3 21%
No. of Recommendations: 0
He was a net seller in 2020, however that was a once in a century pandemic and predominantly airline stocks when international travel was restricted, no brainer?.
Warren and Charlie over recent years have been saying that high multiples in the market can only be sustained if interest rates stay low, now the tide has turned valuations will have to drop? it'll take some time to filter through. I think the guy in the video was saying that the current multiple is c25 and if it drops to the long term median of 15 x earnings that's a 40% haircut on the S&P.
No. of Recommendations: 6
He was a net seller in 2020, however that was a once in a century pandemic and predominantly airline stocks when international travel was restricted, no brainer?
I'm not sure in what sense that decision was a 'no brainer', but it reminds me of a famous investor's aphorism, who said it was good for investors to "to be fearful when others are greedy and to be greedy only when others are fearful."
But in this case, selling the airlines has not worked out so badly - ignoring dividends, the 4 big airlines are almost flat from their nadir at the end of March (LUV down a lot, AAL down a bit, DAL and UAL up about 20%, whereas the S&P is up 74%. I think Buffett was probably fearful, but not for exactly the right reason - in the end, it's not the infectious disease that has really hurt airline profits, it's the discovery that a lot of business travel was unnecessary.
dtb
