Investing Thread

[Hards Alumni]

82

While I do not disagree this is likely a blip, but if that is the case why wouldn't Buffett hang on to his holdings? He definitely did not to generate extra cash at this time. The gold standard for long term investing has made some big moves and I think that needs to be watched closely.

IMO, at the moment a big part of the sell off is the big boys trying to spook the Fed into an emergency rate cut. That said, I very much do take stock in what Buffett does and curious to see what happens in the upcoming weeks.

I agree.  There have already been calls from panicked guys asking for rate cuts, and even some that would absolutely overcook the market... 75 twice in two months?  Madness.

[JWags85]

82

While I do not disagree this is likely a blip, but if that is the case why wouldn't Buffett hang on to his holdings? He definitely did not to generate extra cash at this time. The gold standard for long term investing has made some big moves and I think that needs to be watched closely.

IMO, at the moment a big part of the sell off is the big boys trying to spook the Fed into an emergency rate cut. That said, I very much do take stock in what Buffett does and curious to see what happens in the upcoming weeks.

Ive not much cared for Buffett the investor the last decade and think Berkshire is no longer an elite generator of investment ideas in the industry (still very good, but lost its fastball long ago.  That being said, the one thing I always still take tons of stock in when it comes to ol Warren is pay much more attention to what he does than what he says.  He's even alluded to as much.  So I think your point is very good.  If you want to know what the thinking is from Omaha, look at their filings and not any chatter or interviews from them.

[Goose]

Hards

The big boys and the market have played the Fed perfectly since the great recession. I can hear Powell now talking about how they tamed inflation, watching for any signs of weakness in the market and monitoring things closely. Already had the Chicago Fed chief throwing out a teaser.

[GOO]

I doubt buffets stock moves are market timing or some bigger insight into the economy.  He says he does not invest that way and he ain't lying

He sees highly valued stocks, a great run, a stock in Apple that he never wanted to be 40% plus of his portfolio, tax rates going up in the future. He's been selling all year and started selling Apple too soon. He has kept a big position in Apple at  20% and probably too big. I'm sure he'd like it down to 10% of the portfolio. He said apple will be the biggest holding at the end of the year at the annual meeting some time ago - a hint that he likes it but will be selling more. Not someone dumping a stock or the market. Long term plan.  The timing and quarterly info just happened to line up to make him look like a genius.  Which I'm sure he actually is.

That being said, I like BRK as an investment, as it falls less in bad markets. Gives up some upside in good markets. Steady. Conservative. Kind of like a low cost fund that is managed like a family office for investors. It is simply too big to be a high flyer and make the moves he could when he was younger and smaller.  Not many cheap whales to go after, once word is out price goes up, and small buys don't move the needle.  And brk does not distribute income so his sales don't screw up my 1040, I especially like that a lot! Let them pay the corporate rate which is better than most of the shareholders anyway.


One can always hope he is looking at a big buy. I doubt he touches Boeing as it's such a mess. But it still is a great brand, so who knows.

[Skatastrophy]

It was Todd Brushes or Ted Weschler who built the BRK position in AAPL, and likely the same guys taking profits. Ted and Todd's moves have been mid and should be ignored IMO.

[MU82]

While I do not disagree this is likely a blip, but if that is the case why wouldn't Buffett hang on to his holdings? He definitely did not to generate extra cash at this time. The gold standard for long term investing has made some big moves and I think that needs to be watched closely.

IMO, at the moment a big part of the sell off is the big boys trying to spook the Fed into an emergency rate cut. That said, I very much do take stock in what Buffett does and curious to see what happens in the upcoming weeks.

Yes, Buffett sold a lot of AAPL, Goose. But he STILL has 400 million shares worth $84 billion. And yes, Berkshire has a huge cash stash - close to $300 billion - but it has WAY more than that invested in the market.

So if you truly were totally convinced that the market was gonna go to absolute hell, would you still own hundreds of billions of dollars worth of stocks, including $84B in one company alone?

I am NOT saying there won't be another recession. Indeed, in many comments I've made here I've said, "Of course there will be another recession - there always is." And then there is another recovery. And then, eventually, the market ends up going higher than it ever had before. That's what I meant by "blip."

Could Warren know something we don't? Absolutely! But he has been pretty bearish on the overall market for quite some time now. So we'll see when everything comes down. This last week could have been the start ... or next week ... or next month ... or next year.

The big thing is, "What does this mean for me, Mr. Average Investor?" And my answer is, not a damn thing.

Part of me would love a nice, solid correction or even a mild recession, as much of the market is overvalued (even significantly overvalued), and I always relish the opportunity to buy great companies at reduced prices. But I also know the human toll that major recessions take - job losses, mental-health issues, family problems, suicides, etc. There are some families that still haven't recovered from 2008. So I'd rather that not happen.

[Goose]

82

I read an interesting editorial in the WSJ, sorry don't have the link, and it summed my feelings since we started talking about the economy and the market.

Basically, it says that a decade and half, I think back to 9/11, of free money had to end at some point. It sums up my thoughts very well and worth looking it up.

I have never wanted a day of reckoning and still don't. That said, it has been a strange time in the USA and I still believe it will end up doing more long term pain than short term joy it provided.

I have no idea what ends up happening, but I think ignoring how the easy money was made would be a mistake. I think we are going to be in very interesting times in the near to mid term future.

[jesmu84]

82

I read an interesting editorial in the WSJ, sorry don't have the link, and it summed my feelings since we started talking about the economy and the market.

Basically, it says that a decade and half, I think back to 9/11, of free money had to end at some point. It sums up my thoughts very well and worth looking it up.

I have never wanted a day of reckoning and still don't. That said, it has been a strange time in the USA and I still believe it will end up doing more long term pain than short term joy it provided.

I have no idea what ends up happening, but I think ignoring how the easy money was made would be a mistake. I think we are going to be in very interesting times in the near to mid term future.

If the fed goes back to cutting rates, doesn't the free money continue?

[MuggsyB]

One thing that has always bothered the F out of me is when President's take credit for the market going up.  And both parties do this all the time.  It's also asinine to blame a President for a 3 day tanking as far as I'm concerned.  My take is the President has literally nothing to do with stock markets and it's a small component of the overall economy. 

[MU82]

82

I read an interesting editorial in the WSJ, sorry don't have the link, and it summed my feelings since we started talking about the economy and the market.

Basically, it says that a decade and half, I think back to 9/11, of free money had to end at some point. It sums up my thoughts very well and worth looking it up.

I have never wanted a day of reckoning and still don't. That said, it has been a strange time in the USA and I still believe it will end up doing more long term pain than short term joy it provided.

I have no idea what ends up happening, but I think ignoring how the easy money was made would be a mistake. I think we are going to be in very interesting times in the near to mid term future.

I guess it depends upon how one defines "short term" and "long term." The bull run from 2009 to now has made many ordinary people - including me and my wife - comfortable for life. While we enjoyed life and traveled plenty and spoiled the grandkids and didn't live like paupers, we also didn't spend outrageously as we lived within our means. And the reward is that I think we'll have financial independence for the rest of our decades. And I think there are lots of people like us who will be A-OK unless the "long term pain" you talk about is akin to the Great Depression.

So to me, that's a lot more than "short term joy."

Now, I do know that we are lucky and that there are many, many people less fortunate than we are, which is why I don't want to see anything close to the Great Recession, which crushed a lot of people and certainly would do so again.

I agree wholeheartedly that the near- to mid-term economic future will be very interesting.

If the fed goes back to cutting rates, doesn't the free money continue?

It was more than low rates alone that stoked the economy/market. When folks refer to "free money," what most mean is quantitative easing - a policy the U.S. used for years and years to recover from the Great Recession.

https://www.investopedia.com/terms/q/quantitative-easing.asp

Most of the discussion has centered around the Fed lowering rates to a "sustainable" level - say, 2.5 to 3 percent, as opposed to near-zero, as they were for most of the Obama and Trump administrations - while not having to resort to QE.

We'll see if they can pull it off. A lot of economists are now saying that the Fed has kept rates too high for too long and should have lowered them by now. That belief is, theoretically at least, contributing to the market turbulence the last week or two.

One thing that has always bothered the F out of me is when President's take credit for the market going up.  And both parties do this all the time.  It's also asinine to blame a President for a 3 day tanking as far as I'm concerned.  My take is the President has literally nothing to do with stock markets and it's a small component of the overall economy. 

I don't know about "literally nothing," but I agree that presidents generally have little to do with the stock market's ups and downs. Maybe the previous president had a little more impact because his frequent tweets tended to bring about very-short-term movement in one direction or the other, but even that only went so far.

But Muggsy, are you really surprised when they take credit in good times and are blamed during bad times? That's just the way it goes.

[MuggsyB]

I guess it depends upon how one defines "short term" and "long term." The bull run from 2009 to now has made many ordinary people - including me and my wife - comfortable for life. While we enjoyed life and traveled plenty and spoiled the grandkids and didn't live like paupers, we also didn't spend outrageously as we lived within our means. And the reward is that I think we'll have financial independence for the rest of our decades. And I think there are lots of people like us who will be A-OK unless the "long term pain" you talk about is akin to the Great Depression.

So to me, that's a lot more than "short term joy."

Now, I do know that we are lucky and that there are many, many people less fortunate than we are, which is why I don't want to see anything close to the Great Recession, which crushed a lot of people and certainly would do so again.

I agree wholeheartedly that the near- to mid-term economic future will be very interesting.

It was more than low rates alone that stoked the economy/market. When folks refer to "free money," what most mean is quantitative easing - a policy the U.S. used for years and years to recover from the Great Recession.

https://www.investopedia.com/terms/q/quantitative-easing.asp

Most of the discussion has centered around the Fed lowering rates to a "sustainable" level - say, 2.5 to 3 percent, as opposed to near-zero, as they were for most of the Obama and Trump administrations - while not having to resort to QE.

We'll see if they can pull it off. A lot of economists are now saying that the Fed has kept rates too high for too long and should have lowered them by now. That belief is, theoretically at least, contributing to the market turbulence the last week or two.

I don't know about "literally nothing," but I agree that presidents generally have little to do with the stock market's ups and downs. Maybe the previous president had a little more impact because his frequent tweets tended to bring about very-short-term movement in one direction or the other, but even that only went so far.

But Muggsy, are you really surprised when they take credit in good times and are blamed during bad times? That's just the way it goes.

They piss me off on this and a number of other subjects.  I'll just leave it at that. 

[MU82]

Just watched a little CNBC, and a so-called expert they put on called it a "growth scare."

He thinks there's still a growth story but the market has been temporarily spooked by the Fed reacting a little too slowly, Japan surprisingly raising rates, tumult in the Middle East, political wrangling in the U.S., normal August market malaise, etc. He thinks the bull story will resume soon.

"The last time the Vix was at this level was April 2020," and that turned out to have been an excellent opportunity to invest.

I have no idea if he has a record of judging this stuff correctly, so take it for what it's worth.

[The Sultan]

If the fed goes back to cutting rates, doesn't the free money continue?

No, no, no.

It's only "free" when its in the form of child tax credits and COVID payments. Lower interest rates and income tax cuts don't count.

[MU82]

 Stock futures have S&P up about 1% tomorrow, Nasdaq up 1.3%. Many economists say today's selloff was vastly overdone. Palantir, an important national-defense stock, had a great earnings report and is up 12% after hours.

All of which means nothing ... except don't get wrapped up in short-term market swings.

[Herman Cain]

Just watched a little CNBC, and a so-called expert they put on called it a "growth scare."

He thinks there's still a growth story but the market has been temporarily spooked by the Fed reacting a little too slowly, Japan surprisingly raising rates, tumult in the Middle East, political wrangling in the U.S., normal August market malaise, etc. He thinks the bull story will resume soon.

"The last time the Vix was at this level was April 2020," and that turned out to have been an excellent opportunity to invest.

I have no idea if he has a record of judging this stuff correctly, so take it for what it's worth.

Of the course of 50 plus years of experience in markets and the commercial world, I have repeatedly learned that markets are , for the most part, generally looking forward 6-9 months. Market is the sum of all investors though processes. In the short term Market is a voting machine and the long term a weighing machine .

My experience tells me  on major mover of the market, is the big picture weighing in the ramification of expectations that we have a Democratic sweep  of the Legislative and Executive Branch. With that will came massive taxes on income , capital and potentially wealth taxes.; increased resistance to carbon based fuels and a continuation of a hostile business climate. Prior to this recent expectation change,  market was weighing in a Republican win to sustain either gridlock or with full control , a potentially business environment. So a variant of the old Buy the Rumor, Sell the News scenario playing out in a way right now.

Once market fully prices in new macro scenario, there will be slow steady build up of momentum again as a combination of Individual opportunities and reality of many needing to put dollars to work (Institutional Investors/ Pension/ 401K). So no matter who wins, market could rally post election.

There are likely to be many snap back rallies between now and Election as market will keep bouncing up and down and likely testing the lows one final time. One day events have guard rails imbedded so no dramatic crashes.  We have now broken through 50 Day and 100 day moving averages on Major Indexes and are close to 200 day. VIX is generally reflective of all these moving average tests as well.  At some point will probably see a final test of the 200 day.

I have also felt for some time economy was not as healthy as many thought it to be. Generally speaking the previous year was dominated by Businesses replenishing Inventory depleted from supply chain issues. That scenario has resolved itself. Higher Interest rates taking toll on Capital Projects, much harder to justify returns. Flow through impact to the economy is real. We see it in our customer base. What we have now is stagflation , which is a very lousy environment to operate in.

Buffet is a guy I truly respect. He is the Mozart of investments.  So while some may attribute selling to his "Portfolio Managers", reality and experience says Buffet calls all the shots.  My guess is he is loading  up with Cash, taking his gains at the current tax rates, and looks to make some large acquisitions on the cheap  in the coming years.

Don't really try to market time, and rarely sell ( Although I did in all through 2007). I  do try to look for entry points to establish new positions. So current market environment is a positive from my perspective. Pretty much green light time for stock picking right now. . I take the longer term view and am building a buying list of quality businesses ,where dividends can increase over time , and  may be potentially on sale.

Corporate wise,  I am also looking to make acquisitions of businesses at attractive prices, as many owners are becoming more motivated to sell  and have a lot of potential activity in the pipeline.

I just keep putting one foot forward after the next and grind away.....

[MU82]

Wow, 9-9-9, lots of political mumbo-jumbo in there. You are aware that both the economy (as measured by GDP) and the stock market (as measured by S&P 500 return) have done much better under Dem rule than Republican rule, right?

And of course you sold in 2007. Probably at the very top. And then bought back in at the very bottom. Because you are da man!

[The Sultan]

Wow, 9-9-9, lots of political mumbo-jumbo in there. You are aware that both the economy (as measured by GDP) and the stock market (as measured by S&P 500 return) have done much better under Dem rule than Republican rule, right?

And of course you sold in 2007. Probably at the very top. And then bought back in at the very bottom. Because you are da man!

And definitely not fake.

[jficke13]

Something something if only the "gen AI is a hype cycle pump and dump at best" were something anyone could have foreseen.

[MU Fan in Connecticut]

Just watched a little CNBC, and a so-called expert they put on called it a "growth scare."

He thinks there's still a growth story but the market has been temporarily spooked by the Fed reacting a little too slowly, Japan surprisingly raising rates, tumult in the Middle East, political wrangling in the U.S., normal August market malaise, etc. He thinks the bull story will resume soon.

"The last time the Vix was at this level was April 2020," and that turned out to have been an excellent opportunity to invest.

I have no idea if he has a record of judging this stuff correctly, so take it for what it's worth.

MU82 m, Is this the person?

Today's financial panic looks like the stock crash in 1987—when the economy avoided a recession, market veteran says
BY Christopher Anstey and Bloomberg
August 5, 2024 at 1:39 PM EDT

https://fortune.com/2024/08/05/stock-market-crash-1987-recession-outlook-financial-panic-federal-reserve-rate-cuts-liquidity/

[Hards Alumni]

Just watched a little CNBC, and a so-called expert they put on called it a "growth scare."

He thinks there's still a growth story but the market has been temporarily spooked by the Fed reacting a little too slowly, Japan surprisingly raising rates, tumult in the Middle East, political wrangling in the U.S., normal August market malaise, etc. He thinks the bull story will resume soon.

"The last time the Vix was at this level was April 2020," and that turned out to have been an excellent opportunity to invest.

I have no idea if he has a record of judging this stuff correctly, so take it for what it's worth.

They're modern tea leaf readers.  Plus, if they just list all of the news of the day, people will nod their head because it is something they can understand.

[rocket surgeon]

Of the course of 50 plus years of experience in markets and the commercial world, I have repeatedly learned that markets are , for the most part, generally looking forward 6-9 months. Market is the sum of all investors though processes. In the short term Market is a voting machine and the long term a weighing machine .

My experience tells me  on major mover of the market, is the big picture weighing in the ramification of expectations that we have a Democratic sweep  of the Legislative and Executive Branch. With that will came massive taxes on income , capital and potentially wealth taxes.; increased resistance to carbon based fuels and a continuation of a hostile business climate. Prior to this recent expectation change,  market was weighing in a Republican win to sustain either gridlock or with full control , a potentially business environment. So a variant of the old Buy the Rumor, Sell the News scenario playing out in a way right now.

Once market fully prices in new macro scenario, there will be slow steady build up of momentum again as a combination of Individual opportunities and reality of many needing to put dollars to work (Institutional Investors/ Pension/ 401K). So no matter who wins, market could rally post election.

There are likely to be many snap back rallies between now and Election as market will keep bouncing up and down and likely testing the lows one final time. One day events have guard rails imbedded so no dramatic crashes.  We have now broken through 50 Day and 100 day moving averages on Major Indexes and are close to 200 day. VIX is generally reflective of all these moving average tests as well.  At some point will probably see a final test of the 200 day.

I have also felt for some time economy was not as healthy as many thought it to be. Generally speaking the previous year was dominated by Businesses replenishing Inventory depleted from supply chain issues. That scenario has resolved itself. Higher Interest rates taking toll on Capital Projects, much harder to justify returns. Flow through impact to the economy is real. We see it in our customer base. What we have now is stagflation , which is a very lousy environment to operate in.

Buffet is a guy I truly respect. He is the Mozart of investments.  So while some may attribute selling to his "Portfolio Managers", reality and experience says Buffet calls all the shots.  My guess is he is loading  up with Cash, taking his gains at the current tax rates, and looks to make some large acquisitions on the cheap  in the coming years.

Don't really try to market time, and rarely sell ( Although I did in all through 2007). I  do try to look for entry points to establish new positions. So current market environment is a positive from my perspective. Pretty much green light time for stock picking right now. . I take the longer term view and am building a buying list of quality businesses ,where dividends can increase over time , and  may be potentially on sale.

Corporate wise,  I am also looking to make acquisitions of businesses at attractive prices, as many owners are becoming more motivated to sell  and have a lot of potential activity in the pipeline.

I just keep putting one foot forward after the next and grind away.....

  thank you for the clear eyed post hermie!

[Goose]

82

Thanks for the reply. First, I could not be happier for you and the countless number of folks that have benefitted from the bull market. I also am in that group, a tad less for some moments out of the market, but still in that group. That said, I do think there are countless ways that the long term way of life will be changed due to the run up.

I will not bore you and others by outlining my thoughts, but I think there will be issues that we will be facing for an extended period of time if/when easy money stops becoming the norm. Just one quick question, you noted that you and your wife were responsible with your market gains and set yourself for the long haul, if you had to guess, how many people in your demographic followed your plan? IMO, you are in the minority when it comes to be responsible.

When I say minority, that could be 40% (higher or lower), but I think a lot of people were not as responsible as you and your wife. I have countless firsthand experiences of friends across lower middle class to upper class that saw the bull market as a piggy bank and were not responsible.

When history is written I hope this bull market helped those who needed it the most. IMO, that group is the crazy high number of boomers that were not prepared for retirement. If it did, the low interest rates and printing money might prove to be a great investment for the country. My only complaint, I don't think it was the Fed's or governments job to bail out folks that were not prepared, at least the one's that could have been prepared and chose not to be.

[Hards Alumni]

People with good jobs who are well off have the opportunity to save for retirement and invest.

Those with lower paying jobs don't have that same opportunity, but that can be said for all age groups.

It's part of why we have social security... which is supposed to be the bare minimum someone can live on... which they can't always do where they want to live due to cost of living.

[MU82]

MU82 m, Is this the person?

Today's financial panic looks like the stock crash in 1987—when the economy avoided a recession, market veteran says
BY Christopher Anstey and Bloomberg
August 5, 2024 at 1:39 PM EDT

https://fortune.com/2024/08/05/stock-market-crash-1987-recession-outlook-financial-panic-federal-reserve-rate-cuts-liquidity/

No, it wasn't Yardeni.

While comparing a 3% decline with what happened on Black Monday is kinda silly, I do get his point. Even after yesterday, the market is well up for the year and most forecasters expect it will be a positive year.

People with good jobs who are well off have the opportunity to save for retirement and invest.

Those with lower paying jobs don't have that same opportunity, but that can be said for all age groups.

It's part of why we have social security... which is supposed to be the bare minimum someone can live on... which they can't always do where they want to live due to cost of living.

My wife and I were not "well off." We lived paycheck-to-paycheck on only my income for many years as we raised our family in Chicago. Rather than buying the new cars and the latest tech gadgets, we invested the few extra dollars we had every year. Our family of 4 lived in a 1400 SF bungalow; rather than spend on a big house, we put as much in our 401ks as we could. That kind of stuff. We mostly hung in there until my wife started working and our kids finished college, which also happened to coincide with the start of the bull market.

But we were never poor, and we had good family support - so I know we still were very fortunate, and I don't take that for granted.

I look at Social Security as supposed to being something additional to any savings/investments one could make during one's working years. But again, I know there are plenty of people who didn't have that luxury.

[MU82]

82

Thanks for the reply. First, I could not be happier for you and the countless number of folks that have benefitted from the bull market. I also am in that group, a tad less for some moments out of the market, but still in that group. That said, I do think there are countless ways that the long term way of life will be changed due to the run up.

I will not bore you and others by outlining my thoughts, but I think there will be issues that we will be facing for an extended period of time if/when easy money stops becoming the norm. Just one quick question, you noted that you and your wife were responsible with your market gains and set yourself for the long haul, if you had to guess, how many people in your demographic followed your plan? IMO, you are in the minority when it comes to be responsible.

When I say minority, that could be 40% (higher or lower), but I think a lot of people were not as responsible as you and your wife. I have countless firsthand experiences of friends across lower middle class to upper class that saw the bull market as a piggy bank and were not responsible.

When history is written I hope this bull market helped those who needed it the most. IMO, that group is the crazy high number of boomers that were not prepared for retirement. If it did, the low interest rates and printing money might prove to be a great investment for the country. My only complaint, I don't think it was the Fed's or governments job to bail out folks that were not prepared, at least the one's that could have been prepared and chose not to be.

We agree on much of this, Goose.

I don't think the Fed sees it as their job to bail out anybody, certainly not this Fed, anyway. They seem to have been pretty laser-focused on inflation, jobs and keeping the economy in good shape.

The Great Recession and the pandemic were unique situations that required unique solutions.

I have no idea how many people were or weren't responsible stewards of their own individual financial circumstancers. I agree, probably too many. As you said, though, many simply didn't have a choice because of what life dealt them.

As for long-term ramifications of "easy money," who knows what they'll be? I guess we're all just in the audience, and we'll have to see.