Rates are pretty high, and cash sitting in US Treasuries are earning 5%. When you have $150 billion, that's $7 billion/year growth just in interest.
But it's not actually $7 billion in real growth, it's mostly just inflated.
Berkshire had $149 billion 2021. They have $157 billion today. That's actually a decrease in real terms.
Typically, growth stocks look expensive. Traditional 'Atom' companies had a limit to how much they can grow, while 'Bit' companies (I'm including AMZN, NVDA, AAPL here) seem to keep piercing the MAX frontier function.
Buffett of course doesn't invest in companies that he has little expertise in.
Rule of Investing : Build a model of the world and constantly update it with new information. Guidelines, Indicators, Correlations are meant to be broken.
Build an internal LLM that include long-term successful investors from Buffett to Shkreli and people with integrity like Aswath
Edit: Berkshire Hathaway's largest position is apple. PE of 30, or 3.3% of value, and take on some risk. Alternatively, you can purchase bonds at a 5.3% rate, and basically no risk. You will put your money in bonds unless you have a hot tip about apple sales. You might even sell some of your apple stock to buy more bonds.
Berkshire Hathaway's largest position is apple. PE of 30, or 3.3% of value, and take on some risk. Alternatively, you can purchase bonds at a 5.3% rate, and basically no risk. You will put your money in bonds unless you have a hot tip about apple sales. You might even sell some of your apple stock to buy more bonds.
If apple stock dropped 30%, then it still would yield less than risk free bonds.
Edit: Berkshire Hathaway earnings are up 40% because they are buying bonds, not selling more product.
I'm like maybe I missed something? Let's look at SPY, haven't done that in a month
- 3% off ATH - up 25% YoY - up 2% MoM - up 5% WoW
Shrug
Take a look at the 6 month. We're at the top of a 5 day dead-cat from the last dip right now. I'd put SPY at 420 for 11/10 if I were a gambling man.
Not saying we're headed for a "crash", but there is simply no case to be made for equities in the next 18 months if you are concerned with capital preservation.