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Remain Calm: Buffett Goes To Cash
Regular readers know I have a hard time feigning interest in what Warren Buffett's doing over at the world's largest hedge fund.
What's going on at Berkshire is more or less irrelevant unless Warren's buying or selling something you own. In Q2, he sold something damn near everybody owns in one way or another, whether as a single-stock holding in a brokerage account, through an index product in a retirement fund or via the phone in your hand, the smart watch on your wrist or the laptop you just
It could be he wants some extra cash and apple is his biggest position. Or he just decided to adjust his apple Holdings because the position was too big. Your comments make sense.
Brilliant headline!! Got a chuckle on this end.
Also found it interesting that Wedbush rushed a “don’t panic” promotional piece (as all of their notes seem to be) out over the weekend as well.
Can you imagine someone selling — you know — 50 of their 100 Apple shares on this logic. Like, “Well, Buffett trimmed his $170 billion to $85 billion, so that must mean I need to manage my ‘stake’ down to $11k or so.”
Old Uncle Warren is looking kinda smart this morning…
All investments are contextual. They are based on the expected behavior of the environment, including key value drivers; the structure of the investor’s portfolio and its expected performance; the goals of the investor (theirs, not yours or mine), and many minor variables. The amazing thing here is that at his age, and without his trusted partner, Buffet can look out past his own expected life span and make choices that make sense for the future of his company, even if he isn’t in it. Berkshire is not a mutual fund trying to beat some tricked up benchmark, nor, IMO, is it a hedge fund. Rather, it is the most successful self-generating conglomerate ever assembled. For that reason, making it go will always be an increasingly more difficult task.
Buffett started this journey when I was in my youth, along a similar path being taken by Charles Bluhdorn with his company, Gulf and Western. As a budding finance guy in college, these two firms caught my eye. Berkshire was less well developed early. GW grew quickly and was more interesting early. I bought in as soon as I had money. Sadly, GW didn’t last past Bluhdorn’s untimely passing, although many large pieces such as Paramount, Simon and Schuster have survived. Never got into BRK; my error. My mentor in grad school knew both of these guys, as well as John Bogle and Ben Graham. I got some of all of that for free.
As one about to turn 80, I have begun to note that my portfolio decisions are taking place in similar conditions to those faced by Buffett. I have to force my choices into a financial life that will likely extend beyond my physical life. I have never used common market benchmarks to judge my results. Rather, I look at what’s the best risk/return profile for my money as I have aged and the world has changed. This is an interesting problem to “agitate the little grey cells.” I don’t believe that even for a minute Buffett cares how his portfolio management will be perceived by the folks who buy BRK stocks. He only cares how the pieces fit now, and more importantly into the future. I am confident that he is intent on doing his job and leaves our jobs to us. If you happen to believe what he is doing makes sense and buy his company, good on ‘ya. If you don’t that’s OK, too. This endgame is going to be interesting.