Totally agree, but I doubt he’ll admit defeat. My guess is for now he’ll focus on dividends. But he is sitting on so much cash right now...
Buffet is stuck between a rock & a hard place. He doesn't believe in assets that don't produce a fiat income stream, so won't do gold or crypto. Even less love for negative interest so growing sour on bonds. He doesn't have any place left to put money that fits his philosophy.https://twitter.com/NickSzabo4/status/1167973272610230272 …
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Sitting on fiat is the big white flag of the financial world, it's admitting defeat like words could never do.
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You are right. But Buffet, like many investors, seems to be a victim of normalcy bias - what has worked in the past will continue to work in the future. The past 70 years have taught him that there is no better place to compound you investment than stocks. So he sits and waits...
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That's not necessarily still wrong, just likely to keep increasing in dependence on the central bank cheap money spigot, so increasingly vulnerable to political disruptions in that.
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As long as we keep printing money the stock market will continue to be the cash cow, IMO. They will keep printing money until there in somewhere else to put your money, other than the stock market. Nothing looks promising though, because they keep printing more money.
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Stock buybacks. Corporations with their mouths on the fiat spigot can keep the stock price up if they want to for decades until they've used their cheap fiat to buy back the last share and pay their CEO his last fat paycheck, after which no stockholder loses when they close shop.
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That said, cheap fiat money has also long provided big corporations a huge financial advantage over small businesses, and never moreso than now, so total market cap as % of GDP is still near all-time highs.
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Since I'm not a financial person, I had to look that up and what it meant exactly.
For others that may be reading this thread and also unfamiliar I am linking this. Def overvalued, which is why I try to stick to growth stocks for now.https://www.investopedia.com/terms/m/marketcapgdp.asp …
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Farm land & water rights?
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Possible. But he understands commercial real estate better, and that is in relative decline.
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We are watching the natural conclusion of 30 years of bad policy. Extending cycles rather than letting "nature do its cleansing." We saw the same with forestry management in California.
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How long will this last?!?!
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They can probably string it out for decades more, but each decade it will get much weirder, and the end-game could be quite draconian.
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So if interest rates are negative (or even are as low as they are now), and the perception is that the S&P goes up by 10% year over year (or at least very conservatively has a positive return over a 5-10 year period of time), how is a bubble not inevitable given return arbitrage?
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Because good businesses grow year after year. More clients, more revenue, better return then the stock price grows as well. Not a bubble if the fundamentals are there.
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A good business can have a high PE ratio tho
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A declining but still profitable business can also maintain a good PE ratio with stock buybacks.
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Respectfully disagree... Warren Buffett doesn't buy innovation, he buys institutionalized monopolies, those that have built political firwewalls against competition. Last year he started buying Amazon stock So here we are..
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