Berkshire Hathaway - 1st Quarter 2020 report

[Lootman]

My understanding is that has more cash than usual at the moment which suggests that he might think stocks will become cheaper.

I think WB is more forthcoming about what he has sold than what he plans on doing with his money. A time like this is perfect for his strategy. You may recall in the darkest days of 2008 he made some very profitable preference share deals with Goldman Sachs and GE when they were both on their knees. There are surely opportunities like that now - even beleaguered Carnival Cruiselines managed to get bond financing recently: with a 12% coupon and over-collateralised, it was a nice earner for some deep pockets, although not WB in that case.

Another idea is DJIA constituent Walgreens Boots Alliance. It is the kind of stodgy domestic-focused business he likes, and it has expressed an interest in going private in a deal. Not many could afford the $40 billion or so that would take, but WB could do it.

[tikunetih]

Tikunetih

What they are notably not doing is running binary portfolios that are all in or all out based on the direction they think markets are heading in, which is an extremely risky way to operate a portfolio, akin to gambling unless you have reliably accurate foresight or some other means of recovering from erroneous calls without impacting long term returns too disastrously.

The airline exit looks binary to me.

You've really not understood the point I was making.

Also for things to be attractive on a p/e approach, you have to have either forecasts e going up, or p coming down.

Whether its e up or p down that comes first I can't be sure, but if I had to bet it would be on p down long before e up.

Of course Buffett may know better and it is conceivable that a lifting of lockdown could cause e up, but I am not sure how far this can move.

Not sure where to start with this! Don't think I'll bother.