Its probably a good idea if you dont want to be crushed as rates can change quickly and low rates are much more imbedded into the corporations and households then they were in the last cycle. During 04-06 short term rates increased from 0.74 to 5.27 in just 2 years, long term rates less so but even a change in the short rates can make a very big difference considering how much floating rate debt there is out there. Buffett made one very large purchase and a smaller bet on the energy industry, chalk that up to the economics of two companies and not a statement on market valuation
Buying the pcp business not a stock position, but yes he has been purchasing a lot but not the most ever. As far as mutual outflows, theyre fairly meaningless because the switch to etfs is very real
but into where? Lets say stocks sell for $100 and then the next week they sell for $90. I sell my share to you for $90. I have $90 more, you have $90 less and 1 share but there's no more money on the sidelines
what if investors dont require 6.5% anymore. What if 5% is good enough? That would still almost octuple my money in real terms over the next 40 years. Thats not bad at all.
yeah its pretty fascinating, UNPS carloads have been horrific, I think BNSF will come very close to surpassing UNP's operating income. Coal has been a huge disparity, it has dropped off a cliff with UNP but hasnt budged with BNSF. Some of this is BNSF regaining the prior business it lost when it had trouble with its network but I think theres more to the story.
acquisitions generally dont affect book value because of goodwill accounting. Yes you get the $33 billion added to assets through goodwill and the fair value of assets but you get a reduction to cash of $23 billion and $10 billion increase in debt so book value stays the same.
not much of a bear case but its interesting. I dont believe that low oil is good for bnsf despite its reduced expenses and higher current profits and its not even about petroleum but just about competitive position. Fortunately, theres no single thing that can really kill berkshire. Investment portfolio is only a third of market cap, bnsfs earnings only about 20% of total.
was a six sigma, but this is a very different berkshire. I certainly wouldn't sell here but its because of attractive valuation and not because of faith in buffett, although certainly any future value he adds is a welcome bonus.
yeah thats good stuff. I've been long been negative on Sears, which is a bummer because it had so much potential and now its all about if anything else can be thrown onto a lifeboat before the ship sinks. The entire industry is in trouble and they aren't acting appropriately and for some of them their inappropriate actions have already done so much damage. Even if sears were on decent footing its 400 million annual interest expense would be a challenge for a company with revenues about $20 billion a year. JCP even with its improvements is finding how hard it is to overcome 400 million in interest expense on its $12 billion of revenues.
not too bad, so if stocks go nowhere in the next 5.5 years, Berkshire will pay back $846 million on the puts it received over $4 billion for up front. It will be nice to get them off the balance sheet though because even the risk of a big crash is a little unsettling as you get close to the expiration date.
its all over the internet but basically it just says that mlps are not bondlike with prices down 28% from the peak. It bashes the claim that since they are "toll roads" that they should have inherit stability. However, many MLPs do much more than act as tollroads. Kinder Morgan for example before it went back to corporation form got about 16% of its cash flow from oil production and many companies keep a significant amount of debt floating and are very susceptible to rising interest rates as well as the creditworthiness of the companies with which they do business.
Its nowhere near $185. BRKS year end gives you the best look at actual cost because its laid out best and yes there have been mild changes since then but nothing that changes the calculus much. At year end, berkshire had ~76.972 million shares of IBM that they spent $13.157 billion for, a cost of $170.93 per share. There were some purchases in the first quarter that decreased that number slightly but not materially.
Look at pcps earnings and see just how tied they are to the business cycle