Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
No. of Recommendations: 9
No. of Recommendations: 4
Thanks for posting that. Enjoyed it. Certainly feed into my bearish anxiety about owning productive businesses at high prices.
Seems like the equities crash, has been coming now for a long time. If and when it arrives, it will certainly be painful for many.
Will be interesting to see what Berkshire has been doing lately with its cash flows from operations. Will we see a higher allocation to longer duration bonds and nothing happening in equities or even equity sales?
I imagine Berkshire is glad a very large percentage of the firm intrinsic value is in wholly owned subsidiaries and counter cyclical insurance operations. Although an Apple haircut will be quite painful.
Still, the $50 Billion p.a. going in higher yielding bonds makes the previous lack of elephants problem go away. There would be a limitless supply of debt to buy.
Will certainly be interesting to see if Berkshire does a small pivot, at least with the free cashflow. Since that is so huge, even that can add up to a significant pivot over a few years.
As an individual, it is all about personal circumstances.
Know one knows anything. That said, it does indeed look like the halcyon days are over. The common psychology appears to be:
A. Yes, equities might crash but the ones I have selected will be ok.
B. Yes, the evidence does point towards difficult years ahead for equities but the party is still going. Let's stay another while. This punch is good.
No. of Recommendations: 2
"the evidence does point towards difficult years ahead for equities but the party is still going. Let's stay another while. This punch is good."
Until you get punched in the face.
No. of Recommendations: 1
Howard Marks advocates for a notable enhancement in credit allocation, but how can this be implemented practically?
Purchasing preferred stocks might not be a viable option, considering their current 7% yield. Furthermore, The perpetual characteristic of this instrument might make it less appealing as you lock in funds indefinitely.
Regarding bond funds, intermediate ones are currently yielding approximately 6% for investment-grade corporate bonds. Does not seem like that is a great idea either
Any insights on strategies to amplify your credit allocation?
No. of Recommendations: 11
So many good choices now compared to 2020, before the start of the tightening cycle.
TFLO - US government floating rate notes ETF. Zero duration, 5.65% YTM (yield to maturity) as of now. Good alternative to ST (short term) TIPS.
GOVT - US government bonds of all maturities. YTM 4.8%, duration 5.8 years.
Any number of low ER (expense ratio) ETFs. XHLF, XONE, SPTS for short term, SPTI for intermediate, TLT, SPTL, etc for long term.
Unless the geniuses in Congress manage to shoot all of us in the foot, US treasuries are vastly preferable to corporate bonds.
Corporate bond funds are for idiots. 1% extra yield for 20% declines in bad times when you need bonds to hold up. Buy good corporate stocks instead, as Graham said. Even specific corporate bonds only go on sale only once in a while like after the GFC.
Preferred stocks are basically common stocks with limited upside. Buy only at the right price which I have no clue how to judge.
No. of Recommendations: 1
Forgot to mention -
unlike corporate ETFs/MFs, interest paid out by US treasuries ETFs/MFs is free from state taxes. Still have to pay the IRS.
For me, California muni ETFs like CMF and PWZ are also an option. ~ 3.75% after expenses, tax free as I live in California. So 3.75% / (1 - marginal tax rate) tax-equivalent yield which works out to be 3.75% - 7.5+ % based on your tax situation.
No. of Recommendations: 0
Purchasing preferred stocks might not be a viable option, considering their current 7% yield. Furthermore, The perpetual characteristic of this instrument might make it less appealing as you lock in funds indefinitely.
Regarding bond funds, intermediate ones are currently yielding approximately 6% for investment-grade corporate bonds. Does not seem like that is a great idea either
What exactly are you comparing these against?
Stocks are not bonds. In maritime terms, stocks are for speed, bonds are for ballast. You want bonds to not decline too much, or even go up, when the CNBC pundits are proclaiming that the sky is falling as stocks suffer the bust part of their aperiodic boom-and-bust cycles.
Define your objectives first.
No. of Recommendations: 1
Makes sense to me. He also had an interview with David Rubenstein on YouTube where he discusses his latest memo as well as other stuff.
No. of Recommendations: 4
Howard Marks advocates for a notable enhancement in credit allocation, but how can this be implemented practically?The obvious straightforward way would be to give your money to Howard Marks and have him do for you what he is advocating everyone should do.
Oaktree Strategic Credit Fund is an example. It's a Private Credit fund which generates returns by privately lending to companies.
https://osc.brookfieldoaktree.com/If anyone has experience investing in non-listed Oaktree funds like this, please share.
