Subject: Re: Rational Walk on retained earnings test
But it turns out that Buffett is just like most people, in that sense, and the idea of being greedy when others are fearful is not something he has talked about, but not put into practice, at least not recently.

I would suggest he is putting that famous aphorism into practice right now. The major indices are up double digits in 2023 but Berkshire has been a net seller of stocks, by something like $23 billion, if the reporting is accurate, contributing to the record cash pile. One might draw the inference that Mr. Buffett, like some other value investors, sees no fundamental basis for this year's rally and is fearful while others are greedy.

On the other hand, when the market thought Vicki Hollub had made a terrible mistake, overpaying for Anadarko and putting her own company at risk, Mr. Buffett provided not only financing but also cast a vote of confidence in Ms. Hollub's management by establishing a large ownership stake in her company. He was greedy while others were fearful.

It is a mistake, I think, to view this aphorism in a vacuum. Mr. Buffett is famous for saying other things as well, among them that Rule No. 1 is to not lose money and that forecasting macro events is a fool's errand. To expect him to dive into market crashes based on dramatic macro events to serve the first aphorism, an act that might violate either or both of the latter two, underestimates the complexity of his mental process.

When he feels he has a handle on appropriate valuations, he acts accordingly, often contrary to the enthusiasms of market sentiment. When there are body bags on the sidewalks of New York and the stack of unknown unknowns has grown higher than usual, he reverts to Rule No. 1. I don't view this as a contradiction.