Has the dead cat finished bouncing?

Alistair31

Selling out completely after a fall does seem quite extreme especially when Trump has already intimated he would not let them collapse. 

As above, what do I know. I’m certainly not brave enough to put my money where my mouth is . 

bowlhead99

Alistair31 said:

Selling out completely after a fall does seem quite extreme especially when Trump has already intimidated he would not let them collapse. 

A business is not good value just because it took on further debt to avoid 'collapse'. He buys for future prospects and has always said it can be better to pay a fair price for a good business rather than a low price for a bad one. 

Also, he didn't say that he waited until they got to the bottom of their fall and then sold out completely after that. 

fred246

I remember reading my first book on investment. It said that people always invest in airlines because they are seen as 'the future' but nobodys ever made money out of them.

eskbanker

fred246 said:

I remember reading my first book on investment. It said that people always invest in airlines because they are seen as 'the future' but nobodys ever made money out of them.

badger09

Alistair31 said:

Selling out completely after a fall does seem quite extreme especially when Trump has already intimidated he would not let them collapse. 

As above, what do I know. I’m certainly not brave enough to put my money where my mouth is . 

Interesting auto correct/typo there

Alistair31

badger09 said:

Alistair31 said:

Selling out completely after a fall does seem quite extreme especially when Trump has already intimidated he would not let them collapse. 

As above, what do I know. I’m certainly not brave enough to put my money where my mouth is . 

Interesting auto correct/typo there

Haha, yes. That’ll teach me for posting when only half awake. 

Now edited. 

TemporaryUsernameMay2020

EdGasketTheSecond said:

On the subject of this thread from what I gather of the Berkshire Hatheway meeting, Warren says the average guy should invest in the S&P. He himself was a net seller in April and has not invested as basically nothing worth investing in at the moment. So overall I would say he is slightly bearish. He also sold all airline stocks.

He was obviously keen to talk up America and how great it is; but then he has a lot invested there so I guess you would expect that unlike Elon Musk who was more candid about tesla's share price.

I would agree he may be slightly bearish, or at least not see the current market level as a great buying opportunity. Since he apparently (according to the article linked to earlier) made net sales of shares amounting to nearly 1% of Berkshire Hathaway's assets in April. Though that was after (smaller) net purchases in January-March, and I don't know how much of that was after the crash started.

In his case, being slightly bearish would not imply he has any opinion on the short-term direction of markets. It would perhaps imply that he thinks that if you buy now and hold for a long time, returns might be slightly below what they'd be with a different starting point.

There is no reason not to think his perennial positivity about US business in the long-term is genuine. (His bias to the USA is unchanged, and is, as usual, less appropriate for investors outside the USA.)

You may say Musk is candid; I'd say he's an attention-seeking tw*t In any case, while he (at least arguably) has talent as a CEO, there is no good reason to look to him for tips about investing in shares.

DiggerUK

As things stand at the moment, nine out of ten owners of dead cats are finding that their cats prefer not to bounce.  When GDP starts being produced again after lockdown ends then, and only then, will we find which cats live on.

I believe Mr. Buffet is quoted as saying you can always find out who is swimming naked when the tide turns. It seems unlikely that all bathers will survive coming out of lockdown.

Mr. Buffet is also well quoted as being uninterested in gold, his hole to hole quote is often repeated. Interesting thing to note is that Berkshire Hathaway has about two parts equities to one part cash; that cash pile is over $125billion.... and has been for some  time now. 

So it seems that his only investing in "value stocks" strategic plan has been short of strategic targets for some time. 

It also means that he has the cash to pay  anybody wanting to cash out, quite handy if you want to remain credible. I always remember the warnings about anything that seems too good to be true, that's not a tide going out scenario, but a tsunami..._

Thrugelmir

DiggerUK said:

So it seems that his only investing in "value stocks" strategic plan has been short of strategic targets for some time. 

With a cash pile that big it's hard to build positions without moving the market price. Forced sellers though offer opportunities to buy large lines of stock off book.  

bowlhead99

DiggerUK said:

 

It also means that he has the cash to pay  anybody wanting to cash out, quite handy if you want to remain credible. I always remember the warnings about anything that seems too good to be true, that's not a tide going out scenario, but a tsunami..._

You probably entirely misunderstand what Buffett and Berkshire Hathaway do.

What do you mean 'pay anybody wanting to cash out'? He is not running an investment fund where people can redeem their position and take his cash. He's running an insurance / railroad / utilities / energy conglomerate which also owns various unrelated public and private debt and equity investment holdings together with cash and treasury bills.