No. of Recommendations: 29
I could not agree more with everything you wrote, because it’s what Buffett and Munger have taught us. No one wants to believe what Buffett and Munger have repeatedly professed. But it’s exactly what you have shared.
The stock is relatively expensive as it’s been several times in the past, though not nearly as expensive as it was around the Gen Re stock swap—but in almost all cases it’s not wise to sell businesses that regularly and consistently grow intrinsic value. Buffett also says it’s a big mistake “to be in a rush”. Timing, leverage, options, etc…Munger is more colorful in condemning such behavior.
Everyone it seems wants to engage in what Buffett suggests is a foolish attempt to outguess Manic Mr. Market. Rationalized by a little extra time: “but hey, I’m buying LONG dated options”. Or “ the stock was overpriced I thought Id buy it back cheaper in 6 months, and don’t tell me this is wrong—I’ve done it before”. Just hold the stock…..because…..
And then some folks here understandably went HEAVY cash not long ago when the stock was only 5% under IV vs it’s “normal” 10-20% below IV because you see these nice charts that clearly demonstrate “it’s worked that way before several times in a row”. Well, perhaps not this time…it’s just run away from you and NOW it’s Trump’s Fault or Putin or High Frequency Traders…or, what I’m seeing a lot—the world is a mess has macro problems worse than the Depressions , recessions, World Wars, Famines, nuclear detonation, 9/11…that have defined “normality” the past single century. It’s worse with 2% GDP, stubborn 2.8% inflation, and 4.1% unemployment. And Tariffs! It’s a disaster. Get out! Classic. Textbook.
The numerous biases that Munger warns us about are alive and well sometimes here…and everywhere
Charlie: just hold the g.d.stock.
Warren: if you have an IQ of 160, sell 30 points you don’t need them.
It’s simple. But it’s not easy.
