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- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
No. of Recommendations: 3
Regarding the short term prices movements in the overall market and in BRK, I am in my default state of perplexed funk. (I do remember Jim's oft-repeated maxim. Maybe that explains all of this.)
I naively thought that, being US-centric, BRK would be in a much better position than the average globally-integrated S&P firm.
The President at first threatened to cut off our collective heads and markets swooned. BRK did not swoon. Understandable.
Then he vacillated and as of now, is only threatening to cut off our nose. 90 days till the rest of the head is cut off.
That's good enough for the market to get to YTD positive, but bad for BRK?
I thought stock markets look 6-9 months ahead. China tariffs still at 30%, UK at 10%, etc. Prices have to rise. Inflation and till Powell is replaced, interest rates should rise. How is this business as usual?
If Buffett starts buying now, should I be surprised or worried or just give up? (I mean Buffett, not BRK - Todd or Ted.)
No. of Recommendations: 29
Other than it being futile to expect much rationality from Mr Market, I suspect that some portion of it can be put down to "risk on / risk off".
Good news? Knee jerk reaction to buy stuff that is optimistic and zoomy and growth oriented.
The latest news item makes it look like a recession is coming? The defensives hold up.
I think this view has some modest explanatory power, sometimes. For example, when Berkshire was a gigantic holder of Apple stock, it seemed oddly common for their prices to move substantially in opposite direction for weeks at a time. A higher Apple price should make Berkshire seem more valuable, but one is risk-on and the other is risk-off.
Right now the market is on a sugar high, which makes no sense to me on the surface of things. ("Good news! You have six months to live instead of three!") But it is what it is.
The VIX is back under 18 and the S&P 500 index is high and soaring. It's definitely not for everyone, but if one were ever to consider picking up a few "disaster puts", this might not be such a bad time to start considering it. This year's low may be below 4500 rather than today's 5900. Or not, of course.
Jim
No. of Recommendations: 26
Shouldn’t be perplexed.
Warren warned the value of one of Berkshire’s most important investments, the Utilities, has materially declined. That’s a really big deal. And the earnings, even accounting for currency, were somewhat disappointing.
If instead of announcing his reduction in responsibility in 6 months, he announced he discovered a pill that’ll make him 10 years younger—I think the stock still would have been down on fundamentals post earnings.
Abel was chosen many years ago, we now know. He’s been running Berkshire’s owned subsidiaries for quite a while. The exact timing of the CEO thing was a surprise but the news not at all.
Fundamentals matter though. They’ll improve. Be patient, this is still a prolific cash generating machine that’ll be worth far more in coming years. We just have to do the toughest thing in investing per: Charlie Munger—just hold the g-d stick. Very few have that talent, it’s tough. This stock can stay in the crapper for a very long time. That’s been the case for 40 years. It doesn’t correlate with the general market so get used to feeling like a genius in rough markets and an idiot when risk is on. It takes a while to used to :)
