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I wonder what this is signalling, when it comes to how Buffet's firm stands on market volatility? With stocks up and fresh bad news about the state of the pande

I wonder what this is signalling, when it comes to how Buffet's firm stands on market volatility? With stocks up and fresh bad news about the state of the pandemic rolling in, I would think that they would be more inclined to wait now and buy later. Maybe they feel that the energy sector has gotten "discounted enough already" and that the short-term gains from waiting longer would be outweighed by the relatively safe gains that the investment promises post-pandemic?

purple_ferret 6y ago
This is only a partial buy of assets. In the deal Berkshire agrees to buy out 6 billion of debt (out of 70 billion in liabilities). It's not necessarily a deal that could be had in a fire sale, but one in which Dominion agrees to sell off assets that have some intrinsic value (around 10 billion by Buffet's estimation).
btilly 6y ago
Warren Buffett's long-standing position on market volatility is that he never worries about it or tries to time the market. If he finds a deal and he believes that the fundamental value proposition is there, then he makes the purchase without regard to what might happen tomorrow.
- dopamean 6y ago
  Exactly. It's possible a better deal could be made later but he looked at it and believes it's a good deal now so he'll do the deal now. It makes a lot of sense really.
  - manquer 6y ago
    If you can afford to do so , yes it makes sense . However public company leadership and professional fund managers cannot stop worrying about short term impact , their job is on the line . There is enormous pressure to deliver short term results very few people like buffet can escape that. He is able do it due to his reputation, wealth and peculiar holding structure of Berkshire Hathaway (no splits or dividends ) I should mention as much as short term focus is painted as bad , on average it is good strategy to base people’s performance on. It is better management fails faster than fails slower . “Blue chip” companies should reduce risk more than maximise gain .
    - btilly 6y ago
      There is room in finance for multiple strategies, and a lot of niche funds that you've never heard of. As an extreme example, Taleb's black swan hypothesis requires investors who are OK with losing money day in and day out. And yet people are willing to invest in Universa Investments. (Which is making a killing this year.) Given https://en.wikipedia.org/wiki/The_Superinvestors_of_Graham-and-Doddsville https://en.wikipedia.org/wiki/The_Superinvestors_of_Graham-a... it there should be an appetite for niche funds following the value investing approach. And indeed https://www.investopedia.com/articles/investing/071415/five-wildly-successful-value-investors.asp https://www.investopedia.com/articles/investing/071415/five-... shows that there are successful funds that follow such approaches. They aren't very popular. But the excuse that professional fund managers CANNOT do something like this is clearly specious. However as Taleb says, courage is the one virtue that can't be faked. Running a fund that follows a different strategy than the mainstream requires having the courage to tell investors that if they are not on board with your fund's strategy, then you would prefer that they take their money elsewhere. That kind of courage is rare. (And can be indistinguishable from stupidity for unbounded times.)
      - manquer 6y ago
        Niche funds are exactly that niche. Most(in numbers not the money they control) are not accredited investors and cannot afford to lose their whole investments. There is not much room for multiple strategies in mainstream investments for good reason . Correspondingly most fund managers are not fancy hedge fund managers who can simply be courageous, the legal and the corporate framework they operate under would not allow for that kind of risk taking. Popular media and writers like Taleb focuses way more on this niche segment because it sells more books/movies etc, or is more interesting to write about, and perhaps also because the industry does control a large amount of wealth. Buffet himself strongly believes that hedge funds simply do not justify the management fees they charge and famously bet a million dollars on that thesis and won. Even of the fund managers who actually do have the chance to take aggressive decisions do not always do better than say index traded funds over a long enough time period.
richardknop 6y ago
Not all stocks are up. Indexes are mostly up because of crazy high tech valuations and tech stocks just keep going up parabolically. Banks, industrials, materials, energy stocks are still very cheap, barely recovered from March lows in many cases.
- mxschumacher 6y ago
  They are down a lot, but that doesn't make them cheap

purple_ferret 6y ago

This is only a partial buy of assets. In the deal Berkshire agrees to buy out 6 billion of debt (out of 70 billion in liabilities). It's not necessarily a deal that could be had in a fire sale, but one in which Dominion agrees to sell off assets that have some intrinsic value (around 10 billion by Buffet's estimation).

btilly 6y ago

Warren Buffett's long-standing position on market volatility is that he never worries about it or tries to time the market. If he finds a deal and he believes that the fundamental value proposition is there, then he makes the purchase without regard to what might happen tomorrow.

dopamean 6y ago
Exactly. It's possible a better deal could be made later but he looked at it and believes it's a good deal now so he'll do the deal now. It makes a lot of sense really.
- manquer 6y ago
  If you can afford to do so , yes it makes sense . However public company leadership and professional fund managers cannot stop worrying about short term impact , their job is on the line . There is enormous pressure to deliver short term results very few people like buffet can escape that. He is able do it due to his reputation, wealth and peculiar holding structure of Berkshire Hathaway (no splits or dividends ) I should mention as much as short term focus is painted as bad , on average it is good strategy to base people’s performance on. It is better management fails faster than fails slower . “Blue chip” companies should reduce risk more than maximise gain .
  - btilly 6y ago
    There is room in finance for multiple strategies, and a lot of niche funds that you've never heard of. As an extreme example, Taleb's black swan hypothesis requires investors who are OK with losing money day in and day out. And yet people are willing to invest in Universa Investments. (Which is making a killing this year.) Given https://en.wikipedia.org/wiki/The_Superinvestors_of_Graham-and-Doddsville https://en.wikipedia.org/wiki/The_Superinvestors_of_Graham-a... it there should be an appetite for niche funds following the value investing approach. And indeed https://www.investopedia.com/articles/investing/071415/five-wildly-successful-value-investors.asp https://www.investopedia.com/articles/investing/071415/five-... shows that there are successful funds that follow such approaches. They aren't very popular. But the excuse that professional fund managers CANNOT do something like this is clearly specious. However as Taleb says, courage is the one virtue that can't be faked. Running a fund that follows a different strategy than the mainstream requires having the courage to tell investors that if they are not on board with your fund's strategy, then you would prefer that they take their money elsewhere. That kind of courage is rare. (And can be indistinguishable from stupidity for unbounded times.)
    - manquer 6y ago
      Niche funds are exactly that niche. Most(in numbers not the money they control) are not accredited investors and cannot afford to lose their whole investments. There is not much room for multiple strategies in mainstream investments for good reason . Correspondingly most fund managers are not fancy hedge fund managers who can simply be courageous, the legal and the corporate framework they operate under would not allow for that kind of risk taking. Popular media and writers like Taleb focuses way more on this niche segment because it sells more books/movies etc, or is more interesting to write about, and perhaps also because the industry does control a large amount of wealth. Buffet himself strongly believes that hedge funds simply do not justify the management fees they charge and famously bet a million dollars on that thesis and won. Even of the fund managers who actually do have the chance to take aggressive decisions do not always do better than say index traded funds over a long enough time period.

richardknop 6y ago

Not all stocks are up. Indexes are mostly up because of crazy high tech valuations and tech stocks just keep going up parabolically. Banks, industrials, materials, energy stocks are still very cheap, barely recovered from March lows in many cases.

mxschumacher 6y ago
They are down a lot, but that doesn't make them cheap