I’m putting this here rather than on the Berkshire board because I believe the moves are macro in nature. Specific stocks, yes, but the overall moves in Buffett’s stock allocation demonstrate a clear move to safety.
Warren doesn’t duck in and out of the wholly owned subsidiaries, obvioiusly, but the portfolio does often indicate his thinking. He’s slimming down to the point where 78% of his stock allocations are in just five stocks: Apple (huge), BoA, American Express, Coca Cola, and Chevron. He’s gotten rid of laggards like GM and those facing other unknowns (J&J), etc.
Not sure that safety is the correct word, particularly when looking at the stock betas. (Beta is a measure of the volatility , or systematic risk , of a security or a portfolio in comparison to the market as a whole.) Here are the numbers (betas are from Zach’s):
I can understand why he has questions about J&J: not only the talc issue, which J&J says it retained, but how will the company fare after spinning off consumer products? No telling how much lipstick got spread around in that split…and that goes for Kellogg’s too.
Would like to know about his issue with P&G, I have been holding that one for a while. I could understand trimming P&G if he was 100% sure of a recession, because P&G stuff is pricey, so pricey I rarely buy their stuff myself.
Yes, that is what I was saying. I have about a 4 bagger on P&G, over 5 years, plus divis. Either the concern is a recession causing people to leave P&G’s expensive products for something cheaper, or their analysis says P&G’s profits come from price increases, not expansion of the business. which might not be sustainable.