5 ms·

It's too early to buy, people are still greedy.

simonh 7y ago
At the level Berkshire operates at the calculation is different from generically investing in the market. Buffet buys companies, or big chunks of them, so what matters is the risk profile and liquidity of the individual company. Also when he buys by definition he will create the bottom price of the stock. Him buying will make it go up, so he can’t wait until the price hits bottom, he waits until he has the best buying opportunity and that includes beating other potential buyout investors to the deal so what they are doing matters too. I do agree though, prices have recovered a bit due to the big stimulus package, but there is a lot more bad news to come and markets will react to that.
- imglorp 7y ago
  Okay since you opened the door to playing "call the bottom" where do you think it will be? I'll swag first. The end will be in sight when the US new case rate hits its inflection point and begins decreasing. From that you can sorta tell when things will settle down biology-wise.
  - dhimes 7y ago
    So that's a couple of weeks away, according to the projections I posted yesterday. Peak deaths in the US are estimated for 15 April.
    - perl4ever 7y ago
      I'm still reading things in other US-centric forums (automotive, oil & gas industry) where people are remarking about "hysteria" or acknowledging current numbers but implicitly assuming that the increase in cases is zero. So I think it's very dangerous to assume that prices are accurate if probably millions of people haven't caught up to reality yet. One thing that I read is that the current rebound might have been largely driven by automatic rebalancing of institutional investors who split between stocks and bonds.
      - dhimes 7y ago
        This is an excellent point.
  - simonh 7y ago
    Sure, but that doesn’t necessarily coincide with peak economic impact. We may be looking at some traumatic bankruptcies and economic disruptions, and those will likely lag the medical impact, in some cases by quite a lot. Some of the habits and behaviour changes people are developing may stick, causing severe problems for some companies or even whole industries, and this will play out over a long time. So I can’t say when we will hit bottom, there are too many uncertainties. Also the bottom for some industries and companies will differ from others.

At the level Berkshire operates at the calculation is different from generically investing in the market. Buffet buys companies, or big chunks of them, so what matters is the risk profile and liquidity of the individual company. Also when he buys by definition he will create the bottom price of the stock. Him buying will make it go up, so he can’t wait until the price hits bottom, he waits until he has the best buying opportunity and that includes beating other potential buyout investors to the deal so what they are doing matters too. I do agree though, prices have recovered a bit due to the big stimulus package, but there is a lot more bad news to come and markets will react to that.

imglorp 7y ago
Okay since you opened the door to playing "call the bottom" where do you think it will be? I'll swag first. The end will be in sight when the US new case rate hits its inflection point and begins decreasing. From that you can sorta tell when things will settle down biology-wise.
- dhimes 7y ago
  So that's a couple of weeks away, according to the projections I posted yesterday. Peak deaths in the US are estimated for 15 April.
  - perl4ever 7y ago
    I'm still reading things in other US-centric forums (automotive, oil & gas industry) where people are remarking about "hysteria" or acknowledging current numbers but implicitly assuming that the increase in cases is zero. So I think it's very dangerous to assume that prices are accurate if probably millions of people haven't caught up to reality yet. One thing that I read is that the current rebound might have been largely driven by automatic rebalancing of institutional investors who split between stocks and bonds.
    - dhimes 7y ago
      This is an excellent point.
- simonh 7y ago
  Sure, but that doesn’t necessarily coincide with peak economic impact. We may be looking at some traumatic bankruptcies and economic disruptions, and those will likely lag the medical impact, in some cases by quite a lot. Some of the habits and behaviour changes people are developing may stick, causing severe problems for some companies or even whole industries, and this will play out over a long time. So I can’t say when we will hit bottom, there are too many uncertainties. Also the bottom for some industries and companies will differ from others.