3 ms·
It’s important to remember that the stock market != the economy. You know who would be the first to say that? Warren Buffet. Warren Buffet is actually a big be
by hacknat 7y ago
It’s important to remember that the stock market != the economy. You know who would be the first to say that? Warren Buffet.
Warren Buffet is actually a big believer in not making macro economic predictions. It just so happens that if you pick stocks like he does (based on fundamentals and a certain proprietary “discount”) you’ll probably avoid having your investments tagged in a recession.
Stocks in the Great Recession took a nose dive because of a market downturn, not the other way around. It is very possible (and much more common) for stocks to dip significantly and for the broader market economy to shrug its shoulders and say, “meh”.
We have familiarity bias though, so we think that the next one will look like the last one. Pro tip: it won’t.
- mywittyname 7y agoAdditionally, the article doesn't really discuss how much cash he's holding relative to previous years. https://www.macrotrends.net/stocks/charts/BRK.B/berkshire-hathaway/cash-on-hand https://www.macrotrends.net/stocks/charts/BRK.B/berkshire-ha...
- igravious 7y agoYeah, as always, context!
- adventured 7y agoYour reference material is incorrect (it doesn't understand how to assess cash & cash equivalents properly). Berkshire Hathaway's cash position was sitting at an all-time high of $122 billion as of early August. Your source claims $44 billion. Buffett will be distraught to find out $78 billion in cash is missing. "The result was that the company’s cash hoard -- a major focus for investors in recent years -- surged to a record $122 billion." https://www.bloomberg.com/news/articles/2019-08-03/buffett-s-cash-pile-hits-record-as-berkshire-holds-122-billion https://www.bloomberg.com/news/articles/2019-08-03/buffett-s... For further reference here is a chart of Berkshire's cash going back to 1996 from Reuters: https://i.imgur.com/VzrG8lP.jpg https://i.imgur.com/VzrG8lP.jpg
- mywittyname 7y agoI think conflating bonds and cash is misleading for this purpose.
- whatshisface 7y agoBy the way, if you buy a stock and then short sell an index, you can be guaranteed to make money in a market downturn so long as the stock you picked does better than the index. But good luck picking a stock that consistently outperforms the market! Warren Buffet can do that, though.