BRK vs S&P - July 2023

Ignore the predictors of doom and gloom. Dollar cost average. Sleep well. Enjoy life.

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Agreed! Love me some dollar cost averaging into Berkshire!

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We have August. Update, please.

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Do these comparisons take into account the lower compounding over time in the S&P500 versus Berkshire? Because the S&P500 pays dividends each year, some of the compounding is lost to taxes, while Berkshire doesn’t pay dividends, so the full amount keeps compounding.

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15 years to date:

Hard to see, but SPY just beats BRK.b, +376% vs +374%

BTW, look at the '08/09 drop on this chart. I remember being sick to my stomach then, couldn’t look anymore, down over 50% of net worth at one point. Staying in the market and letting it compound worked great, so far.

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True, but difficult to show, varies by tax situation, and really doesn’t amount to much for most people. SPY ETF is very tax efficient. VOO is even cheaper.

Divi is right, Berkshire hasn’t done great for a long time now. I don’t know what Mr. Market saw yesterday. Jump in book value, I suppose, but that was totally expected. I thought the Q2 report quite disappointing. For the second time ever, the stock price is above my 5-groves IV estimate.

The greatest investor sits on nearly $150 billion in cash. That’s fine if they feel they need to well cover the $166 billion float, but then he should just say that’s what he’s doing, instead of this “won’t go below $30 billion” thing.

So, they’re looking to invest over $100 billion? Not going to happen. Mars isn’t for sale, people. Google is, from time to time.

It could happen. Just as an example, let’s say there’s a crash (or a mini-crash) in Commercial Real Estate, and a biggie begins to go down. It’s possible that Berkshire would jump in as a savior with $50+B equity funding, take a big chunk of equity, take warrants and/or preferred, and then simply wait a while for recovery. Could potentially be very profitable.

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Could happen. All that cash gives options. But here’s why I don’t think it will:

Take 1.55x book as a proxy for value.
Value/(Cash+Fixed Income) 2013-2023:
21%
23%
22%
22%
23%
24%
22%
23%
20%
21%
20%

Move $50bn from cash and the ratio is 13%.
Move $100bn from cash and the ratio is 7%.

(Cash+Fixed Income)/Float 2013-2023:
94%
101%
99%
102%
109%
105%
111%
113%
109%
92%
99%

Move $50bn from cash and the ratio is 67%.
Move $100bn from cash and the ratio is 4%.

Hmm. WEB is very afraid of “any large number multiplied by 0” tenet.

In 2020, when the pandemic hit, the markets dropped 40% overnight. Perfect short term panic. Instead of buying WEB sold. He sold a lot. Dumped airlines and banks.

Last year when Nasdaq crash, GOOG was available for $70. Nope.

During the great recession, there were opportunities everywhere. Back to Back to Back, S&P declined. He did not jump in. Bought some BAC and later on when markets stabilized went in for BNSF.

Other than AAPL, his other capital allocation is sputtering (KHC, Airlines, Banks, PCC, OXY…)

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And I applaud Buffett’s stewarding of Berkshire to avoid repercussions of black swans that most cannot imagine. I’m sure you’d have bashed him if he’d swung at some pitches and the crap had subsequently hit the fan.

I think his reasoning of selling Airlines are legitimate. If he owned the shares, any government bailout would be complicated.

No. Airlines were not bailed out.
However, banks were bailed out in 2009 and WEB participated with purchase of BAC.

What is your definition of bailout?

They were. Directly.

Throughout the pandemic, via three separate statutes, the 10 major US passenger airlines together received more than $54 billion in direct payments ($25 billion, $15 billion, and $14 billion). Congress also appropriated another $25 billion in subsidized loans from the US Department of the Treasury (only a fraction of which airlines have used) and suspended the 7.5 percent excise tax on domestic air travel as well as payments to airports and contractors.

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