No. of Recommendations: 5
“For that reason I have a decent cash allocation. In an inflationary world, that might well hurt my purchasing power, versus equities but this market looks bubbly to me.”
Appreciate and respect all perspectives and how we each have our own macro read and thoughts of what makes sense given current conditions. Realize forecasting is for the birds, but I’m still 95% equities, but 70% is BRK and 5% cash/MM. Markets & Big tech feel a bit overbought, but nothing like the .com bubble and burst imo. WEB has net trimmed our marketable securities over the last couple years, but nothing too crazy & is still around 15% cash/cash eq., I believe.
The growth, cash, FCF and the networking effects of really Big techs (AAPL, MSFT, GOOG, AMZN) is pretty impressive despite the elevated multiples vs. historical multiples imo so I’ve not trimmed them yet. Even with the .com buildup & froth, it was over 3 years between Greenspan’s “irrational exuberance” comments in 12/96 and the bubble burst of speculative & profitless tech.
Who knows when the next correction/ recession will interrupt this pleasant setting, but, for now, I’m still enjoying the hors d’oeuvres, punch and music as it relates to BRK & Big tech.
“Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade.”
—A.Greenspan(12-5-96)
