The longer your compound capital, the less you need luck and the more you need Shrewdness.
- Manlobbi
Halls of Shrewd'm / US Policy
No. of Recommendations: 2
🙏🙏
No. of Recommendations: 1
No. of Recommendations: 35
What fascinates me is that the shift in mood and market direction is stark, and the investing environment and uncertainty have certainly deteriorated a vast amount, but the two are not [yet] in scale with each other: the market isn't actually down very much. Not relative to where it was, and certainly not anywhere near what one might call a normal valuation level, let alone "cheap".
Combined with the fact that the true intrinsic value of most of the world's equities has fallen in a lasting way because it is now a much tougher world in which to make profit, I agree that Mr Buffett is likely to go shopping at some point, but that point may yet be a very long way off.
Based on smoothed real earnings, the S&P 500 would have to drop another 14.6% just to get to its 20 year average valuation level, or drop another 18.5% to get to its 30 year average level. Things ain't cheap. Yet.
Jim
No. of Recommendations: 0
" Based on smoothed real earnings, the S&P 500 would have to drop another 14.6% just to get to its 20 year average valuation level, or drop another 18.5% to get to its 30 year average level. Things ain't cheap. Yet.
Jim"
Read what Grantham thinks.
No. of Recommendations: 2
No. of Recommendations: 12
Who got elected and the politics of that person are by leaps and bounds the most important investing variable when their platform is radical. To attempt to take this out of an investment forum is literally playing child's games.
We have all together made Trump easily the most powerful man in my 70 year lifetime. The grievance is the sell and anger/revenge are attractive/addictive to a huge percentage of people, so elections will reflect that. But what comes along with revenge/anger leadership?
As I wrote before, jolts down are coming. My view is whatever the current set of jolting principals Trump is performing will be followed by many, many, many more because it is he and only he who has the power today...far-far-far different the DJT 1 four years.
I think even with a 25% or lower approval Trump can maintain his control of the US. Fear is going to ratchet up.
And a rally? That's just the one thing that will prove this downturn cycle is NOT over!
No. of Recommendations: 3
I don't know if it was Charlie, but it sounds Charlie-ish. I read somewhere that one shouldn't try to buy in a correction until it is painful, unbearably so, to not buy. And then wait two more months. See you all in June...?
No. of Recommendations: 11
jim,
per other post, you seem to assert the real (industrial) economy is burnt.
yet it seems any combo of tariff cancels, tax cuts, etc...would violently overspike u.s. equities.
only the gop can seriously believe 2 decades off offshoring and supply chain optimization can be fixed by midterms (per trump himself).
what is the metric for 'it's too late now'?
[from Chase Taylor]
“Let me keep this as simple as I can. If this policy is not meaningfully changed this year – we will enter a Depression. If we meaningfully change it this summer, we will have a tough recession. If we meaningfully change this policy before it takes effect next week, we will face an ugly slowdown but survive it ok. I know many folks think there is a master plan, but master plans have folks doing the work – not using LLMs to tariff penguins and not even use tariffs in the calculations for how much to tariff folks. We have significant tariffs now on things like coffee and bananas (we do not grow those in the US), underwear, cheap toys, etc. Things we either cannot or should not even produce in the US. Plus making food more expensive is unfathomably bad policy. If a lot of the dumbest tariffs are not taken off before next Friday – this may be the worst economic policy any of us will ever witness in our lives.”
No. of Recommendations: 18
jim,
per other post, you seem to assert the real (industrial) economy is burnt.
Well, "burnt" is strong. I see it as pretty much incontrovertible that a reasonable expectation of the aggregate profits of the world's companies in the next 15 years is materially lower than the reasonable expectation was a week or month ago. Lower doesn't mean zero of course, just...lower. Stock prices have gone down, but I do not think it is a certainty that world stocks are any cheaper than they were, as I think the true IV has gone down too.
As for equity markets, there are two other multiplicative effects to consider.
* The geopolitical situation - it is not, shall we say, "normal" for the US to behave as an expansionist empire claiming land currently within the boundaries of several former allies. Ferengi rules of acquisition #35.
* The fact that we are going into this with pretty extraordinary US equity valuation levels
This isn't saying that the world's equity markets are going to drop soon, nor how far if they do, since the future is uncertain. But the omens are not good. My gut feel is a bounce soon (because the urge to buy on dips takes a while to burn itself out), followed by a substantially longer and deeper real bear market at some point. But my gut feel isn't worth much, as I ate some questionable choices at dinnertime.
Jim
No. of Recommendations: 0
Jim, re your "bear ... lot of time to get out ... 3 months after the top only -10%"?
With now -20% in the S&P after 1 month what´s your personal opinion in light of that: Do you think it´s different this time? Or that it will go for that MANY more weeks to come effectively sideways? Or else?
No. of Recommendations: 1
With now -20% in the S&P after 1 month what´s your personal opinion in light of that: Do you think it´s different this time? Or that it will go for that MANY more weeks to come effectively sideways? Or else?Here is a scenario
1. Market drops 15-20% (done)
2. Market bounces back 5% - 10%
3. Market slowly slides down another 20% (with many ups and downs over a 2 year period)
In terms of SP-500
Top : 6,100
Stage 1: 4,880
Stage 2: 5,300
Stage 3: 4,200
If you can forecast a true bear, Stage 2 is an excellent time to sell...
BTW: A "deep" bear would be 3,700 or so; which I would put in the 30% likely scenario...
tecmo
...
No. of Recommendations: 4
re your "bear ... lot of time to get out ... 3 months after the top only -10%"?
With now -20% in the S&P after 1 month what´s your personal opinion in light of that:
I'm not Jim, but this has the earmarks of a correction and not the beginning of a bear market.
Corrections are typically a short sharp drop, bear markets begin by a rollover.
OTOH, the market has been overvalued for a long time.
No. of Recommendations: 13
I'm not Jim, but this has the earmarks of a correction and not the beginning of a bear market.
Can it not be both? Starts with the correction, ends with the bear market for a long time.
Like Jim said, Trump has just reduced the future earnings of every single company in the world. At least those who trade with America, which may not be a lot of them from now on. It's a disaster and there is no reason to sugarcoat it at this point. If the tariffs are rolled back, it will be better, but the uncertainty will still remain. That is what Trump specializes in, and there is no reason to believe that he will give a predictable long-term guidance about his policy ever. Because that will mean giving up his perceived power. And that is what he's thirsty for.
No. of Recommendations: 12
"I'm not Jim, but this has the earmarks of a correction and not the beginning of a bear market."
Can it not be both? Starts with the correction, ends with the bear market for a long time. Posted 04/07/2025 11:41 PM
No, not generally.
A bull market ends when there are no more buyers remaining. For the first 1/3 of the bear there are only people gradually selling.
A sharp drop is people selling in a panic. That's trading on emotion, and emotions are fickle so they can turn on a dime and buy again almost as quickly.
I am writing this on 4/8/25, 30 minutes after market open.
Headlines from finance-yahoo:
* Dow jumps over 1,000 points as stocks make bid for rebound
* Nvidia leads Magnificent 7 rebound
* S&P 500 opens 3.4% higher
* Dow 30 +1300 (+3.4%)
* Nasdaq +619 (+3.97%)
* BRK-B +21.57 (+4.3%)
* QQQ +17.14 (+4.05%)
This is emotional buying.
"Trump has just reduced the future earnings of every single company in the world."
Here's another thing: In stock market news, the reasons that the talking heads give for a market move are almost always wrong and have no bearing. The fact of the move is right, but the reason is not.
post hoc ergo propter hoc
No. of Recommendations: 5
"I'm not Jim, but this has the earmarks of a correction and not the beginning of a bear market."
Can it not be both? Starts with the correction, ends with the bear market for a long time. Posted 04/07/2025 11:41 PM
No, not generally.
A bull market ends when there are no more buyers remaining. For the first 1/3 of the bear there are only people gradually selling.
A sharp drop is people selling in a panic. That's trading on emotion, and emotions are fickle so they can turn on a dime and buy again almost as quickly.
I am writing this on 4/8/25, 30 minutes after market open.
Headlines from finance-yahoo:
* Dow jumps over 1,000 points as stocks make bid for rebound
* Nvidia leads Magnificent 7 rebound
* S&P 500 opens 3.4% higher
* Dow 30 +1300 (+3.4%)
* Nasdaq +619 (+3.97%)
* BRK-B +21.57 (+4.3%)
* QQQ +17.14 (+4.05%)
This is emotional buying.
"Trump has just reduced the future earnings of every single company in the world."
Here's another thing: In stock market news, the reasons that the talking heads give for a market move are almost always wrong and have no bearing. The fact of the move is right, but the reason is not.
post hoc ergo propter hoc
Addressing in reverse:
It was not a talking head, it was Jim (backed by good economic analysis) that I was paraphrasing.
Regardless of market moves, in the US economic reality as of today, tariffs = stagflation, regressive tax on consumption, dampened trade, dampened growth, very likely recession, possibility of depression.
The emotional buying stopped and reversed today. Buying has faded.
Regardless, as mentioned previously, bear markets can have violent brief rallies as people buy on the dip and the shorts cover. One swallow does not a summer make, but a severe drought of foreign-made goods will.
No. of Recommendations: 0
In terms of SP-500
Top : 6,100
Stage 1: 4,880
Stage 2: 5,300
Stage 3: 4,200
If you can forecast a true bear, Stage 2 is an excellent time to sell...
Stage 2 complete? the market bounced up to 5200 this morning.... did anyone sell (I sold a bit of BRK)
tecmo
...
No. of Recommendations: 10
rayvt opined that this was a correction, not the beginning of a long bear, because: "A bull market ends when there are no more buyers remaining. For the first 1/3 of the bear there are only people gradually selling. A sharp drop is people selling in a panic. That's trading on emotion, and emotions are fickle so they can turn on a dime and buy again almost as quickly."
I wouldn't count on what 'generally' has been the case to hold true when the economics of the global business community just changed so radically, so fast. There should be zero surprise that the stock market would react rapidly and violently to what Trump has done. Unease was already rising from the hatchet job on the federal government and the uncertainty that that was creating, and then to abruptly erect such massive barriers to global trade, with clear negative implications for inflation and for economic activity, of course we have an ongoing massive sell-off.
Will it continue into an extended bear? The longer we go without a reversal of most of the tariffs, the lower it will go, because the stock market is still very richly priced from an average valuation standpoint (CAPE = 30.6 now vs an average of 18.6 since Jan. 1941), that is, it's priced for growth, but the tariffs will deliver contraction, so it's entirely rational for the market to adjust to the new reality.
If Trump declares victory and goes back to something more measured and sane, then there becomes the possibility of a turnaround, but if the tariffs have already plunged us into a recession, which is probably happening at the moment, then the bear may assume a momentum that a reversal of the tariffs won't be able to stop.
Trump is pretty unpredictable, but I don't think he'll be very quick to make any very broad reversal of the tariff policy. A vicious, recession-fueled bear seems more likely than not to me.
Small cap stocks are already down ~28%, and my fave small cap value fund is down 34%, and that's from a valuation that was only very modestly over average at the peak. Good buying opportunity, but a much better one is likely coming, IMO, and I'm waiting it out for the moment.
I'm still mostly invested in the stocks and funds I was in before this nonsense started and I'll just ride it out, but I did raise some cash over the last few weeks with the intent of bargain-hunting.
No. of Recommendations: 0
This, about Jim Simon´s Renaissance hedge (about it´s Institutional Equities Fund)....
https://archive.ph/6cYCq....may point to the current market moves not being typical, as otherwise their sophisticated AI algorithms should have been able to better avoid it.
No. of Recommendations: 0
I don't know if this makes a difference, but Jim Simon's died fairly recently.
No. of Recommendations: 5
the economics of the global business community just changed so radically, so fast. There should be zero surprise that the stock market would react rapidly and violently to what Trump has done. Unease was already rising from the hatchet job on the federal government and the uncertainty that that was creating, and then to abruptly erect such massive barriers to global tradeIf Trump declares victory and goes back to something more measured and sane,... Way back in 2016/2017 there were many articles about the Disruptor Trump. One comment that stuck in my mind was something like "... Trump did not like the way things were going, so he knocked over the table..." (I think that was maybe from Scott Adams.)
Today, I think that the problem people are having mentally is that they expect the US President to be a normal typical politician. DJT is not that, so they don't understand what is going on, because none of what he is doing fits into their mental model of a President.
Like when you step on the 5'th step of a 4 step staircase.
When you hear "... goes back to something more measured and sane ..." that's expecting DJT to be a typical politician. How long will it take for people to get it through their heads that Trump is
NOT a typical politician?
I have said that I read a wide range of people, not just those that agree with me. Here's one who has a different take on what is going on.
https://www.coffeeandcovid.com/p/the-art-of-the-gl... You don't have to agree with him -- or any of the other talking heads on the internet. Just listen to a whole range of opinions.
"Historically, tariffs have always been used as protectionist tools (e.g., Smoot-Hawley) or revenue generators (in the pre-income-tax period). But Trump saw something every other president missed: he’s wielding tariffs as a universal negotiation tool, forcing countries to come to the table, not just to talk about widgets and steel, but to extract much broader concessions on things like military cost-sharing, tech regulation, currency manipulation, and who knows what else."From DJT on talks with the 70+ nations:
"We are likewise dealing with many other countries, all of whom want to make a deal with the United States. Like with South Korea, we are bringing up <u>other subjects that are not covered by Trade and Tariffs</u>, and getting them negotiated also. “ONE STOP SHOPPING” is a beautiful and efficient process!!!"https://truthsocial.com/@realDonaldTrump/114302499...Everybody and his brother has been saying that the stock market was way overvalued and ripe for a fall. That being the case, it is odd that this fall is blamed solely on the Trump tariff thing.
Odd that these discussions are on the BRK board. BRK has held up quite well compared to the S&P 500.
No. of Recommendations: 10
That being the case, it is odd that this fall is blamed solely on the Trump tariff thing.
I think if you go back and look at the market moves and the tariff announcements, the moves pretty well correlate. Especially the move on the rumour for the 90 day delay.
Perhaps the market being at a higher multiple than average has made the moves larger, but in my opinion, if the tariffs had not been announced, forward earnings estimates would have been much higher and the market would have been higher.
The tariffs in my opinion are not a catalyst but a cause.
Aussi
No. of Recommendations: 33
<<That being the case, it is odd that this fall is blamed solely on the Trump tariff thing.>>
Is it still odd, now that he's backed off (after letting friends and family know to buy at the lows) and the market immediately shoots up 8 percent?
No. of Recommendations: 4
Never seen anything like it.
I think we're headed 30% lower over the next year or so. So much just doesn't add up with policy and valuations.
Thoughts?
No. of Recommendations: 3
Never seen anything like it.
I think we're headed 30% lower over the next year or so. So much just doesn't add up with policy and valuations.
Thoughts?Yes, he not only said he would do this 37 years ago…but he wrote a book on how he would do it. Amazing!
It may not be complicated enough for the huge brain power on this esteemed board.
https://a.co/d/codBGmr
No. of Recommendations: 2
there are a few data-driven analysts not interested in sane-washing trump, and they all say its more than just tariffs or just elevated indices.
i suggest reading Michael Cembalest , despite being a dimon employee.
to paraphrase one fund manager, there many things 'deeply unserious' about team trump's incoherent tangible goals, and the actions executed in reaching such.
but hey, MAGA.
No. of Recommendations: 1
Is it still odd, now that he's backed off (after letting friends and family know to buy at the lows) and the market immediately shoots up 8 percent?He let everyone know.
THIS IS A GREAT TIME TO BUY!!! DJT
Apr 09, 2025,
9:37 AM Easternhttps://truthsocial.com/@realDonaldTrump/posts/114...
No. of Recommendations: 4
borrowed that tactic from Musk... years back, he used to tweet in advance of his quarterly calls...the cult grew and grew , because "dear leader" finds ways to give them the scoop....
No. of Recommendations: 2
Best comment I read today:
" Best to just ignore all of the handwringing and come back in a few days when things have settled down..."
*singing* When will they ever learn, when will they eeeeever learn? */singing*
Never ever react immediately when some big new item comes out. (That's when the 5 minute google experts and the talking head newsreaders come out.) The first news is often wrong and/or incomplete. Wait 48 hours. With DJT, maybe wait 96 hours.
I didn't see that Apr 09, 2025, 9:37 AM Eastern tweet, but I did make a great buy with some leftover cash at 11:36.
No. of Recommendations: 53
They key insights for me are
* the tariffs are mostly a side show, it's the geopolitical side that matters. The taxes on imports are there, their size is changing literally hour by hour, they will settle into some level, some folks will be wiped out, but life will probably go on for most people.
* current policy moves are not a rational and coherent part of any grand unified plan, it's all being made up as it goes, BUT there are a few underlying goals that are pretty consistent and (dare I say it) some of them are not unreasonable goals.
On the latter point,
* There is a strong and consistent policy to reduce the US trade deficit, which isn't a terrible idea. There are sensible ways to do that, and I haven't seen those tried yet, but hey, one step at at time.
* There is also a strong and consistent policy goal to re-industrialize the US in the specific areas (like steel, low-tech and high-tech fabrication) that would indeed lead to improved security resilience. Again, there are ways to do this that are more effective and less damaging and, well, more considered--but the goal of security resilience in this sense of specific types of manufacturing capacity is not entirely unreasonable for any country. A big country without machinists is indeed a bit vulnerable. There is no need for the US to make its own running shoes, but there is a case to be made for not being reliant on China for cotton linters for artillery.
That's a view of tariff chaos and a few kernels of sanity among the motivations for recent moves. (some subset of the motives, if not the actions themselves...)
To me the big problem for the world's countries, economies, and stock markets is the separate goal of hegemony. Wanting to define and completely control (indeed, annex) a sphere of influence of tributary or vassal states is kind of 15th century, but they seem entirely serious. My own assessment of the fall in the true value of most stocks (the well founded portion) comes more from this than from the tariff noise. The problem isn't the sound of cannon, it's the metaphorical encroaching army over the hill. And slightly less-than-metaphorical in some places. Among other things, there are serious investment implications arising from the fact that no country will trust the US again for many many years, and that will hit virtually every firm bigger than a barber shop. Decoupling, divestiture, falling trade intensity, falling world production, lower incomes, more conflicts. And not a whit of this can be undone by another speech announcing a change in policy like a change in the weather, or by another election--the trust is already gone.
Forget the tariffs, look at the geopolitics.
Jim
No. of Recommendations: 3
Never ever react immediately when some big new item comes out. (That's when the 5 minute google experts and the talking head newsreaders come out.) The first news is often wrong and/or incomplete. Wait 48 hours. With DJT, maybe wait 96 hours.
Better yet, just be a business owner. Buying the farm land and all the crap Warren’s been preaching for 60+ years. Simple…but not easy!
No. of Recommendations: 6
rayvt wrote:
"Best to just ignore all of the handwringing and come back in a few days when things have settled down..."
That's been my thoughts and actions as well. I haven't worried, lost sleep, or even gotten tipsy. Life really is too short (believe me...I have stories, as I'm sure we all do!).
Other than providing excerpts from Warren's 2003 Squandersville article, I haven't commented much if anything on tariffs or politics etc. I have my thoughts but I've managed to keep them to myself, by almost biting my tongue off!
I haven't been buying or selling much of anything (other than trading short-term T-Bllls as they matured). I did sell the small amount of OXY I had in a taxable account to harvest a tax loss, but I did keep the little OXY I have in an IRA.
Being fat, dumb, and happy does have its benefits at times!
Don't worry about this stuff, it will all work out...
No. of Recommendations: 6
https://youtu.be/KpnUyGM5M-I?si=-2N5hjv3o0cbMrNtI found this Howard Marks interview useful.
Talks about.
1. Disruption to the world economy and how America was built over the last 80 years through globalisation and specialisation. Used the shaken snow globe analogy. This is no longer thr case (Trump)
2. Market historically over valued still, to what degree? Figuring that out makes a great investor (Buffett)
3. No visibility on earnings
4. Unintended consequences and spin offs, unknown?
5. Can't value anything, too many unknowns.
So here we are with no visibility more uncertainty than he's seen in his lifetime and an overvalued market. This surely explains Buffetts large cash position.
No. of Recommendations: 5
I enjoy Manlobbi's grayed-out comments found on each page. The last one I read today commented about viewing change as an opportunity. Peter F. Drucker also advises us to embrace change as an opportunity, not as a threat.
Peter taught and lectured at a small college near where I lived at the time. What a great gift to this small community! Harvey Mudd at The Claremont Colleges in Southern California, attracted top business students worldwide. I've read several of his books four decades ago. He and his colleagues also were instrumental in introducing the Japanese Style of Management to the USA (Quality Circles and such).
I started my first of several businesses, at the age of 24. I didn't discover Mr. Drucker until a few years later. My business struggled at first, as I fought change because of fear...not understanding that change provided opportunity. After studying him for several months, I finally got it! Look for, understand, and exploit change! I also adopted the concept of Quality Circles, including involving coworkers in decisions that affect them.
Anyhow, for those who don't know him and for anyone interested, here's an article in Psychology Today that provides more details about Drucker. His books can be found on Amazon.
https://www.psychologytoday.com/us/blog/the-peter-...Brief Bio:
https://en.wikipedia.org/wiki/Peter_Drucker
No. of Recommendations: 5
Just received this link from a friend--CNBC video with Buffett, Munger, and Gates discussing the previous US Vs China tariff threat about 6 years ago, approx. 14 mins
https://www.youtube.com/watch?v=Kx7515qZu74tairbear00
No. of Recommendations: 0
Is this legal? WTF!
No. of Recommendations: 32
<<He let everyone know.
THIS IS A GREAT TIME TO BUY!!! DJT
Apr 09, 2025, 9:37 AM Eastern>>
Yeah, he let "everyone" know who's on the social media feed he owns. Great way to build a following as an influencer, I guess. Not such a great way to President.
No. of Recommendations: 9
"Among other things, there are serious investment implications arising from the fact that no country will trust the US again for many many years, and that will hit virtually every firm bigger than a barber shop. Decoupling, divestiture, falling trade intensity, falling world production, lower incomes, more conflicts. And not a whit of this can be undone by another speech announcing a change in policy like a change in the weather, or by another election--the trust is already gone.
Forget the tariffs, look at the geopolitics.Sounds dire.
I'll contrast your statement with Buffet's (an American) in 2021:
"When you next fly over Knoxville or Omaha, tip your hat to the Claytons, Haslams and Blumkins as well as to the army of successful entrepreneurs who populate every part of our country. These builders needed America’s framework for prosperity – a unique experiment when it was crafted in 1789 – to achieve their potential. In turn, America needed citizens like Jim C., Jim H., Mrs. B and Louie to accomplish the miracles our founding fathers sought.
Today, many people forge similar miracles throughout the world, creating a spread of prosperity that benefits all of humanity. In its brief 232 years of existence, however, there has been no incubator for unleashing human potential like America. Despite some severe interruptions, our country’s economic progress has been breathtaking.
Beyond that, we retain our constitutional aspiration of becoming “a more perfect union.” Progress on that front has been slow, uneven and often discouraging. We have, however, moved forward and will continue to do so.
Our unwavering conclusion: Never bet against America."https://www.berkshirehathaway.com/2020ar/2020ar.pd..."These builders needed America’s framework for prosperity – a unique experiment when it was crafted in 1789 – to achieve their potential. In turn, America needed citizens like Jim C., Jim H., Mrs. B and Louie to accomplish the miracles our founding fathers sought.I'd add that Elon Musk, who it seems many on this board have shown disdain for, has done more for the US and humanity than the Claytons, Hassan's and Blumkins.
No. of Recommendations: 4
a. warren is again proving himself to be the greatest mkt timer by lowering his exposure to american equities.
he has a bit more struggle escaping the usd and his fully owned businesses, so its unrealistic to expect a major bet against america.
b. henry ford and william shockley are considered great megalomaniacal contributers to america.
i suspect you have no clue what else they have in common with musk.
No. of Recommendations: 1
Hi, tairbear00,
I can't believe you got no likes for this.
There was so much information in those silences and looks, it was amazing.
Thank you.
No. of Recommendations: 3
<<He let everyone know.
THIS IS A GREAT TIME TO BUY!!! DJT
Apr 09, 2025, 9:37 AM Eastern>>
Yeah, he let "everyone" know who's on the social media feed he owns. Great way to build a following as an influencer, I guess. Not such a great way to President.
I didn't say it was a great way to be president. I was only reacting to someone else saying Trump let his friends and family know to buy at the lows. Nothing to do with liking him or agreeing with him. It was just a factual observation.
Zooming out a little bit more, for those paying close attention, the signs were all building up that the situation was becoming unsustainable and a policy reversal announcement was imminent. Credit spreads and treasury yields were going up basically vertically on Tue night. Bill Ackman begging for a 90 day reprieve, Jamie Dimon saying we are going into a recession, a big but brief spike on Monday morning based on a rumor of a 90 day pause, what Bessent was saying in his interviews (forget about Lutnick and Navarro .. pay no attention to them) etc. I won't rehash everything here, but Trump's tweet was just one sign in a long list.
I am not saying any of this is great. However, for those who were looking to profit from the uncertainty, the signs were definitely there.
You are not going to get low prices unless some bad is happening. The key is to make a judgement that the situation is temporary, then hold your nose and buy.
No. of Recommendations: 2
Great clip,
Clearly alot of concern about Trumpenomics which Warren mentions is not good for the Global economy and Charlie mentions isn't clever.
"We all need to get along with as much free trade as possible for the benefit of everyone."
This is the opposite of what Trump is doing.
Warren doesn't like to criticise Trump as he's worried about being targeted. His cash pile speaks volumes after watching this. Thanks!
No. of Recommendations: 8
<<He let everyone know.
THIS IS A GREAT TIME TO BUY!!! DJT
Apr 09, 2025, 9:37 AM Eastern>>
I imagine that post was to cover for all the associates who bought options just before the announcement. The SEC would find it very suspicious if they all bought without some public information as an excuse. The insider tip they did receive, was that the 9:37 message was not just cheerleading.
No. of Recommendations: 1
*singing* When will they ever learn, when will they eeeeever learn? */singing*
Never ever react immediately when some big new item comes out. (That's when the 5 minute google experts and the talking head newsreaders come out.) The first news is often wrong and/or incomplete. Wait 48 hours. With DJT, maybe wait 96 hours.
I didn't see that Apr 09, 2025, 9:37 AM Eastern tweet, but I did make a great buy with some leftover cash at 11:36.
I am not familiar with that song. I don't think it will make the Billboard 100 or whatever the modern equivalent is.
Trump's Art of the deal reveals a little bit about his negotiating tactics. There is never a win-win, it's if you win, then I lose. He is applying that to tariffs. Plus his thirst for attention by being unpredictable at all times. You can wait 96 hours or a lifetime for DJT, there is just no telling where he will go next.
I don't think Jim is wrong, and that geopolitics is important, but the immediate threat to the American economy is/are the tariffs. I don't understand how a 90 day pause equates to 8% increase in the future earnings of all stocks. Reading the DJT-leaves, Maybe the endgame is to levy a 10% flat tariff on the rest of the world so they think they got some relief from the punitive and made up numbers that he published earlier. And hit China as hard as we can because for some reason, they are our enemy number one. Maybe it's 1984 and Eastasia is now the new enemy instead of Eurasia.
Even though I have directed my latest posts in response to to your posts, I'm not trying to single you out. I just think there is a fundamental difference in our viewpoints as to what is happening to the American economy. Imposing tariffs are in the long-term, an extremely damaging decision for American consumers. We are going to be materially poorer,
pun intended. Even if, miracle of miracles, America manages to build up its agricultural and industrial infrastructure and produced most goods locally.
No. of Recommendations: 6
I am not familiar with that song. I don't think it will make the Billboard 100 or whatever the modern equivalent is.
"Where Have All the Flowers Gone?" is a folk song written by American singer-songwriter Pete Seeger in 1955. The song has been released in at least twenty languages.
Peter, Paul and Mary included the song on their eponymous debut album (which spent five weeks as the No. 1 album in the United States) in 1962.
"Where Have All The Flowers Gone?" ..., reached No. 4 on the Easy Listening chart.[16]
Johnny Rivers had a 1965 U.S. top 40 hit with a folk rock version, reaching No. 26 on the Billboard Hot 100[8] and No. 9 in Canada.
The 1964 release of the song by Pete Seeger was inducted into the Grammy Hall of Fame in 2002 in the Folk category.
No. of Recommendations: 0
Thanks Newfydog.
In my defense, I was negative mumble years old for all the dates you have cited, so I had no clue it's a line from a real song.
No. of Recommendations: 18
Forget the tariffs, look at the geopolitics.
...
Sounds dire.
I'll contrast your statement with Buffet's (an American) in 2021:
...Our unwavering conclusion: Never bet against America."
Mr Buffett has been correct about this in the past. But the past is a different place.
To assume that something will keep happening because it happened in the past, "engineer's induction", is not always good enough. He's continuing to make an all-in wager on that, as he always has, because he trusts the rules of thumb that have worked throughout his life and likely always will. Sometimes that works out, sometimes not.
One might argue that his reasons are not merely because of past observations, but because of fundamental advantages. Fair enough, that makes sense. But the most productive places are those with minimally distorting industrial policy, strong and predictable rule of law, open capital accounts, well educated workers and demos, and high trade intensity. If there were league tables for that list, the US would be way lower than it was in the past.
I'd say think it's time to remove the word "never", at least. I've made [redacted] betting against America this week, enough that I am up nicely month-to-date. I imagine I'll do fine elsewhere.
Jim
No. of Recommendations: 4
it seems people are mistaking an ambiguous public announcement on trump's MAGA website versus knowledge passed to family and friends what he will actually announce a few hours later.
they are missing the whole point of grift being an insiders' game.
No. of Recommendations: 2
No. of Recommendations: 13
I agree, Jim. Today’s geopolitical picture, brought on by U.S. tariffs, (currently noise)
will (could) lead to no country trusting the U.S. for many, many years.
Reminds me of times past…
The Interwar Period (1919-1939): Post World War I, the U.S. retreated into a policy of isolationism. Rejection of Versailles Treaty, League of Nations which created European distrust.
Smoot-Hawley Tariff Act of 1930: Distrust caused when the U.S. raised tariffs on imported goods, which triggered international retaliatory tariffs which deepened global economic depression.
Vietnam War Era (kinda 1960s-1970s): Extraordinary European and Developing Nation’s condemnation.
Iraq War (early 2000s): Again, U.S. causing rift with traditional European Allies as the U.S. used questionable “intel” to act outside int’l norms/process. Euro polls absolutely car killed U.S. foreign policy and created a huge drop in favor to the U.S. during this period.
While no country trusting the U.S. for “many, many years” may be a debatable point for some, I share your perspective of trust damage that would suggest future fluctuations or varying degrees of trust across global regions and specific countries. I would yield to some…there will always be some nations that maintain positive relationships with the U.S. for strategic reasons and evolving economic alliances.
As always, I so enjoy you thinking, both depth and breadth, Jim.
Good stuff!
Grateful Always,
PaulnKC
No. of Recommendations: 5
"*singing* When will they ever learn, when will they eeeeever learn? */singing*"Ah, young whippersnappers, thinking the world began with their birth.
"Where Have All the Flowers Gone?" is a folk song written by American singer-songwriter Pete Seeger in 1955.
Peter, Paul and Mary included the song on their eponymous debut album (which spent five weeks as the No. 1 album in the United States) in 1962.
it is one of the rare folk albums to reach No. 1 on the Billboard chart in the US, where it remained for over a month.
https://www.youtube.com/live/BmLTXDkWf2s
></curmudgeon>
Anyway.....
Imposing tariffs are in the long-term, an extremely damaging decision for American consumers. We are going to be materially poorerHere's another take, by a well respected person, Victor Davis Hanson.
https://amgreatness.com/2025/04/10/ten-tariff-ques..."The real trade war wasn’t Trump’s—it was decades of lopsided deals, deficits, and double standards America tolerated while others profited."
No. of Recommendations: 2
Thanks Newfydog.
In my defense, I was negative mumble years old for all the dates you have cited, so I had no clue it's a line from a real song.
I figured as much. Funny how one's outlook changes as one gets older.[*]
Sometime in the 1980's my young son was listening to his radio while going to bed, and he said to us, "You guys were lucky you had all these great singing group -- like the Beatles." FYI, the Beatles formed in 1960 and officially broke up in 1970 -- before any of our kids were born.
BTW, google is your friend.
-------------------
[*] What gets weird is when your teenage grandson hits the age at which you first met your wife-to-be.
No. of Recommendations: 65
I agree, Jim. Today’s geopolitical picture, brought on by U.S. tariffs, (currently noise)
will (could) lead to no country trusting the U.S. for many, many years.
Reminds me of times past…
The Interwar Period (1919-1939): Post World War I, the U.S. retreated into a policy of isolationism. Rejection of Versailles Treaty, League of Nations which created European distrust.
Smoot-Hawley Tariff Act of 1930: Distrust caused when the U.S. raised tariffs on imported goods, which triggered international retaliatory tariffs which deepened global economic depression.
Vietnam War Era (kinda 1960s-1970s): Extraordinary European and Developing Nation’s condemnation.
Iraq War (early 2000s): Again, U.S. causing rift with traditional European Allies as the U.S. used questionable “intel” to act outside int’l norms/process. Euro polls absolutely car killed U.S. foreign policy and created a huge drop in favor to the U.S. during this period.
While no country trusting the U.S. for “many, many years” may be a debatable point
Let me suggest a different perspective. First, when Jim speaks of the loss of trust he's primarily not speaking of the tariff brouhaha. That's more of a symptom. He has explained that it's about geopolitics - America receding from its alliances, abandoning its principles of support for democracy, the rule of law, threatening allies, no longer valuing mutual trust and long term mutually beneficial relationships, abandoning international institution of which it was the primary architect, abandoning all of its soft power around the globe. Replacing those with a purely transactional and extortional zero-sum view of geopolitics, and showing a tendency to get along with foreign dictators more than with former allies.
Looking at the history of the last century, there were two major eras until 2025. In the pre-WWII era the U.S. was not a significant player on the world stage. The British Empire ruled the world and the seas and international commerce (what relatively little of it there was), and the Pound Sterling was the reserve currency of the world. America was an emerging power but not quite there yet, much like today's China. It all changed after WWII when America became the dominant power and established a vast empire, not through conquest but through the creation of strong alliances and international institutions. America dictated a new world order that held for 80 years (79 years and 8 months to be precise). The empire grew stronger with time, and dramatically more so when the Soviet Union collapsed in 1991. The Vietnam and Iraq wars were brief and insignificant setbacks that did not break America's hegemony or the trust of its allies.
On January 20, 2025 the world entered a new era in which America made a unilateral unprovoked and monstrously stupid choice to abandon the world order it had built and painstakingly maintained, and replaced it with chaos. That kind of shattering of trust will, IMHO, never be repaired.
Elan
No. of Recommendations: 32
"The real trade war wasn’t Trump’s—it was decades of lopsided deals, deficits, and double standards America tolerated while others profited."
Prove it.
Has American standard of living gone down or up in the last 50 years?
Did being the world's reserve currency allow Americans to enjoy low inflation for a long time?
Are the top 10 companies in the world, by market cap, American?
Other countries' willingness to hold their government debt has helped Americans to buy now, pay later. Maybe morally wrong or whatever, but a value-add to the material prosperity. Trust in American institutions has helped bring in foreign investments.
It's not that other countries want a trade surplus with anyone. It's always easier for governments to pay foreign countries with pieces of paper while buying real goods and services. It's that so far, a lot of these pieces of paper were greenbacks.
Lopsided deals - like what?
Double standards - like what?
Guy is just another right wing nutjob foaming at the mouth. If he is a brilliant economist, and knows better, then he is a hypocrite as well.
No. of Recommendations: 16
America receding from its alliances, abandoning its principles of support for democracy, the rule of law, threatening allies, no longer valuing mutual trust and long term mutually beneficial relationships, abandoning international institution of which it was the primary architect, abandoning all of its soft power around the globe. Replacing those with a purely transactional and extortional zero-sum view of geopolitics, and showing a tendency to get along with foreign dictators more than with former allies.
This
No. of Recommendations: 8
Has American standard of living gone down or up in the last 50 years?
Hmm, as an outsider please let me ask: Why, when I visited the US, was this European shocked by finding many Americans can't afford decent housing, can at best rent one single room in a house? Very different for many European countries.
This reminds on the situation in a country I know a bit, New Zealand, where housing also the last 20 years became more and more unaffordable for MANY, with the Kiwi dream of your own house for a good part of the younger generations much further away than 20 or 30 years ago.
You mention clothes, whiteware etc. This is, as a German banker once famously called it, "peanuts" = nothing. Housing is the single one thing that decides over standard of living. A fancy 65" TV and having Netflix doesn't compensate for having to watch Telly - and to live(!) - in a shed.
With housing as the main criterion I am not that sure how much the standard of living really did increase for a good part of the Western population - especially in the English-speaking countries.
No. of Recommendations: 0
Back to the thread´s subject for a moment: With another probably interesting night ahead (for the ones behind the - as an ingenious poster just said - "orange curtain" that of course is "Day"): Just for fun, as (understandably) the discussions are very heavy and serious:
What will it be? My bet is on the S&P bouncing up and us (that is: Berkshire) more or less unchanged or a bit down, as it so often lately moves in the opposite direction.
No. of Recommendations: 54
Here's another take, by a well respected person, Victor Davis Hanson.
https://amgreatness.com/2025/04/10/ten-tariff-ques...
"The real trade war wasn’t Trump’s—it was decades of lopsided deals, deficits, and double standards America tolerated while others profited."I am sure, say, Pol Pot was well respected by some people. Mr Hanson may have fans, too--I can't say you're wrong about him being "respected"--but he is clearly an economic illiterate.
The US deficit is NOT caused by the behaviour of non-US trade partners, whether "fair" behaviour or "unfair". It is caused because the US consumes more than it produces. The total income of private US entities (individuals and corporations), plus the "income" of levels of government (taxes), is simply lower than the aggregate spending of that same group. So the difference is borrowed from abroad, to pay for the "extra" consumption/spending. This would be fixed with a bit more savings and/or a bit more taxation within the US. Nothing any other country does or does not do will change that. Other than, perhaps, declining to lend more money to the US.
Separately, dissing non-US countries for unfair trade practices is in some ways justified...every place on earth has its little favourites and it's hard to persuade them to move towards a level playing field. The WTO and GATT before it did an admirable job over the decades getting a bit of rationality into things, getting overall tariffs and barriers gradually ratcheted down in the face of generally economically illiterate politicians listening to local special interest groups. Not many people have read their Bastiat.
But one should not think the US is any kind exception in this regard--some US tariff and non-tariff barriers are in some ways among the world's most egregious, often ranging from dire to the absurd. Check how much it would cost a non-US sugar producer to ship a new 23-cent pound of white sugar to the US. The answer: a tariff of 15.36 cents. Such an import is in effect banned, causing the existence of the high fructose corn syrup industry, which would not exist in other circumstances, since it's very inefficient. There was a spat with some European countries in the 1960s about US chickens, so the US slapped a temporary 25% tariff on pickup trucks ("the chicken tax"), which is still in place, having caused massive distortions to both the US and global automotive industries. The US hates following mutually agreed rules so much that they have in effect shut down the WTO, refusing to allow any members to be appointed to the appellate body, which became inquorate and ceased operation in 2019.
The most predictable effect of tariffs is to cause the industries getting the protection from competition to become more inefficient, which of course means they export even less. And of course retaliation, which has the exact same result. History shows that raising tariffs may indeed cause imports to fall, but they generally cause exports to fall even more, so they don't improve the balance of trade. India in the 1970s-1980s is a fine example of the effect. No--if you want to move in the direction of a trade surplus, just engineer a savings surplus or raise taxes a bit. Conversely if you want a bigger trade deficit in goods and services, cut taxes and (optionally) raise tariffs.
Jim
No. of Recommendations: 5
On January 20, 2025 the world entered a new era in which America made a unilateral unprovoked and monstrously stupid choice to abandon the world order it had built and painstakingly maintained, and replaced it with chaos. That kind of shattering of trust will, IMHO, never be repaired.
Elan77 million American citizens disagree with you. The popular vote and all the swing states. The bums lost!
https://youtu.be/O5epuPMf-7Y?si=pl2wkq4jSeTUZQlF
No. of Recommendations: 32
77 million American citizens disagree with you. The popular vote and all the swing states. The bums lost!
A whole lot of people voted for him, for sure. He won the most recent election fair and square, the rules being what they are.
But it should be noted that Mr Trump has now managed to get less than half the presidential vote three times in a row. Most people who vote, vote against him. Consistently.
Jim
No. of Recommendations: 32
Taking both Elan's and Jim's last comments together paints a reasonable snapshot of the self-inflicted wound which has only just begun to bleed. If our 250-year legacy of reasonably free elections and adherence to the Constitution continues, there will be another team trying to pick up the shards in another four years (minus the two months it has taken to socially and economically trash much of what has made America great).
So, let's examine what is going on from a domestic standpoint. This has not been limited to any specific political party. Our peculiar type of "democracy" (that's a word that would require a paragraph or two of closer description) fosters our politicians accepted massive "donations" in order to get reelected (as, if they lose an election, they can no longer continue "doing the good work of government"). It takes a real stretch of faith to believe that a six-figure donation (let alone Musk's largess) doesn't buy influence or, at the least, access to the politician’s sympathies. They also heavily participate in the legalized bribery we call "lobbying" to become more familiar with places they can best apply their influence. And our senators and Congresspersons are exempt from insider trading regulations. And, as long as they don't become too greedy and cross the line, all legal, so they can claim that they are not corrupt. That means that the 3% of politicians who put their constituents’ interests before their own (Mike Bloomberg, former mayor of NYC, a Warren Buffet-type character, is one of the few I can think of) give the rest of politicians a bad name.
Western European countries, in general, have elected to use much higher income tax rates than we pay in the US (somewhat assisted by the assumption that they could save on defense spending because the US would protect them) to provide their society with a substantial standard of living level. Essentially free education, high-paying jobs, liberal vacations, attention to food quality, pensions, national health programs and such are taken for granted - along with what, to USians, would be considered onerous tax rates on high earners.
In the meantime, since the 1980's, the US has continually worked to reduce the tax rates assigned to the higher strata of income-earners. Simultaneously, (partially because "home economics" is not taught in school) our population is constantly besieged by the concept that buying "on credit" is a good idea and it is "common knowledge" that our domestic economy is built on a large portion of the population living in perpetual debt in order to afford all the shiny objects that a person of the social status they hope to join one day are supposed to own.
From the standpoint of those at the top of the economic food chain, the optimal scenario seems to be discontinuing an income tax. In order to accomplish this, all "social" programs, such as food assistance, medical assistance, educational assistance, financial assistance and so on should not be the responsibility of the federal government. Also, the infrastructure to support government regulations which reduce the profitability of their companies have got to go. That they were put into place to protect the general population is not as important as maximizing profit. Similarly, in the face of a constant string of "once in a generation" weather events adding up to "climate change", accepting the concept would mean lower profits.
In the past, I had a personal challenge trying to find a post-Civil War decade (other than 1945-1955 when all of our competitors were still digging out of the rubble) was the one great enough to emulate and I couldn't come up with one. Apparently, I didn't notice how great the end of the 19th Century was. While it was called the "Gilded Age" from the standpoint of guys like Rockerfeller, Carnegie, J.P. Morgan and Vanderbilt, for most of the country, the conditions were more like something out of a Dickens novel. In those days, riff-raff like Jews, Irish and Italians were not yet considered "White" by society and were lumped in with "other races". Ethnic (or other) diversity was not even a topic of conversation.
We are currently in the thralls of social, economic and political regression to a time which is romanticized by the robber barons at the top, protected by tall tariff walls and where cowboys roamed the plains (and who cared about anyone else?). There is an awful lot of tearing down before we get there, but there is a lot of tearing down being done.
It amazes me how easy it seems to be to manipulate enough of the crowd to think that this is a good thing and to convince them that the higher standard of living of Europeans is built on the shoulders of the American workers.
Jeff
No. of Recommendations: 10
Why, when I visited the US, was this European shocked by finding many Americans can't afford decent housing, can at best rent one single room in a house?
My first few residences, almost 50 years ago, were renting out a bedroom in someone's house. This was in a very high cost of living part of the US, and I resolved that problem by moving to a cheaper area several states away. So have things actually changed, or is it just the willingness to go through the preparation to get past those challenges?
Post high school, my Depression Baby parents pretty much unceremoniously dumped us kids on the sidewalk and said your turn now. Being the youngest, they took advantage of being empty nesters by selling the house and moving full time into an RV. I had no back up safety. I was thrown in the deep end of the pool of life, with only the financial swimming lessons I had been able to inadvertently absorb as life happened around me. We did not speak finances in our family, but parents gave an example of frugality and I knew they invested. That was the grand sum of my preparedness. I don't recommend the depth to which they took things, but not withstanding the sometimes dangerous side effects of their approach, I came out unscathed and above all wiser. I understood the difference between wants vs needs, and how to economize. I developed focus on what I wanted from life, which early on included having both a roof over my head and food on my plate. Probably didn't help that this was happening in the early 1980's, which was a tough time economically.
These are more the days of helicopter parents, constantly hovering over their kids and making sure nothing negative ever happens. It seems as though things have swung polar opposite of how I was raised, both extremes lacking balance. If one is always fawned on, given everything, how do you learn to distinguish between needs and wants, and how to get from where you are now to where you want to be? Yes, the media is focused on how expensive housing has become, and we hear the wailing of those proclaiming they can't afford to buy or even rent, WHERE THEY WANT TO BE. We live in one of those high COL areas now, and yet I continuously see stalled on the market older very livable homes that go unsold. Not HGTV ready, so no buyers, until a flipper comes along, throws a bit of paint on the walls and kitchen cabinets, rips out the smelly old carpet and puts in vinyl plank, at which point it sells in days for hundreds of thousands more than they paid. Frankly that was how we got to afford the house we are in.
WANT. NOW! Seems to be what is holding back those still living in roommate situations and not moving forward.
IP
No. of Recommendations: 18
8and20: 77 million American citizens disagree with you. The popular vote and all the swing states. The bums lost!
Jim: A whole lot of people voted for him, for sure. He won the most recent election fair and square, the rules being what they are.
But it should be noted that Mr Trump has now managed to get less than half the presidential vote three times in a row. Most people who vote, vote against him. Consistently.
Jim, you are such a gentleman. Just one of the reasons you have a great deal of respect on the message boards, whereas Mr. 8and20...not so much.
No. of Recommendations: 5
Jim, you are such a gentleman. Just one of the reasons you have a great deal of respect on the message boards, whereas Mr. 8and20...not so much.
Thank goodness! Long winded bloviating fake/false information is nothing to strive for.<sarcasm>He should stick to his stellar investment advice.</sarcasm>
I will say I’ve never seen anyone in my life who thought they knew everything about everything as does Jim. Trump is only a close second 😊.
No. of Recommendations: 32
I will say I’ve never seen anyone in my life who thought they knew everything about everything as does Jim.
I never claimed otherwise! Like my Mom before me, I'm never at a loss for an opinion. I figure if I express enough of them, some are bound to be valid if only by chance.
But I do think that Mr Munger probably had me beat.
Jim
No. of Recommendations: 5
The US deficit is NOT caused by the behaviour of non-US trade partners
Don't care.
Nothing that I or you or elan or any of the other posters here thinks makes any difference. We're just yelling at the sky.
We cannot control the situation, and we have zero input to whoever does control the situation.
We can only control what we do, and history has shown that investing with emotions and/or political opinion is an overall losing situation. This doesn't count those who live in Lake Woebegone, of course.
These debates are as useless as college dorm room bull sessions. But they keep our blood flowing, so that's a win I guess.
A wise man once said, "There are only two kinds of investors: those who don't know where the market is headed, and those who don't know that they don't know."
"The real key to making money in stocks is not to get scared out of them." - Peter Lynch
1/4th of the people hate Trump, 1/4th of the people like Trump, 50% of the people seem to remember that somebody named Trump had a reality TV show.
No. of Recommendations: 20
What a difference in our (the US) attitudes between post WW2 and present. The foresight of individuals like George Marshall and the European Recovery Program enacted in 1948.
From Wikipedia
The US transferred $ 13.3 billion (equivalent to $133 billion in 2024) to Europe to rebuild.
The goals of the United States were to rebuild war-torn regions, remove trade barriers, modernize industry, improve European prosperity and prevent the spread of communism. The Marshall Plan proposed the reduction of interstate barriers and the economic integration of the European Continent while also encouraging an increase in productivity as well as the adoption of modern business procedures.
In contrast to the bitterness after WW1 that resulted in another WW two decades later there hasn’t been a major war in eight + decades.
Somehow, I beginning to realize that the bitterness brigade is on the march again.
No. of Recommendations: 28
Nothing that I or you or elan or any of the other posters here thinks makes any difference. We're just yelling at the sky.
We cannot control the situation, and we have zero input to whoever does control the situation.
RayVt
I don't think it is as hopeless as you seem to suggest; individuals can make a difference. Some quotes from people who had a different opinion.
“Do what you can, with what you have, where you are.” – Theodore Roosevelt
A reminder that small actions can make a big impact, especially when resources are limited.
“Be the change that you wish to see in the world.” – Mahatma Gandhi
Change often starts within; leading by example can inspire others.
“In the middle of every difficulty lies opportunity.” – Albert Einstein
Challenges can often be a catalyst for growth and innovation.
“The best way to predict the future is to create it.” – Peter Drucker
Proactive efforts to shape a situation can lead to better outcomes.
Aussi
No. of Recommendations: 21
Hmm, as an outsider please let me ask: Why, when I visited the US, was this European shocked by finding many Americans can't afford decent housing, can at best rent one single room in a house? Very different for many European countries.
Quoting from Fareed Zakaria's WaPo column from last weekend:
"The real economic story of the past three decades is that the United States has surged ahead of all its major competitors. In 2008, the U.S. economy was about the same size as the euro zone’s; now, it is nearly twice the size. In 1990, average U.S. wages were about 20 percent greater than the overall average in the advanced industrial world; they are now about 40 percent higher. In 1995, a Japanese person was 50 percent richer than an American in terms of GDP per capita; today, an American is about 150 percent richer than a Japanese person. In fact, the poorest American state, Mississippi, has a higher per capita GDP than Britain, France or Japan."
Elan
No. of Recommendations: 21
On January 20, 2025 the world entered a new era in which America made a unilateral unprovoked and monstrously stupid choice to abandon the world order it had built and painstakingly maintained, and replaced it with chaos. That kind of shattering of trust will, IMHO, never be repaired.
Elan
77 million American citizens disagree with you. The popular vote and all the swing states. The bums lost!
90% of those people have no clue what I'm talking about.
Elan
No. of Recommendations: 1
Rodrik's trilemma problem
No. of Recommendations: 0
On January 20, 2025 the world entered a new era in which America made a unilateral unprovoked and monstrously stupid choice to abandon the world order it had built and painstakingly maintained, and replaced it with chaos. That kind of shattering of trust will, IMHO, never be repaired.
Unfortunately, I think you're right. We've got travelers here, so we need them to report back, and it's not lost on me that many people here have business contacts and friends overseas. In the coming months we need to hear it. I didn't make any moves, should have. I think I'm too late, but are there any foreign currency funds or TIPS funds in Schwab? I think this is going to continue.
I'm headed to the Philippines for a month, but they have a very favorable view of the US... so far.
No. of Recommendations: 2
I'm very reluctant to use the "ignore" button. But there comes a time when posts becomes repetitive and predictable. So they adds nothing. When I can tell who sent the post before I look at the sender, it's time I move on.
Others may differ. That's OK too.
No. of Recommendations: 7
<<... are there any foreign currency funds or TIPS funds in Schwab?>>
Yes, both. The Schwab TIPS ETF is SCHP. There are others on offer, with somewhat higher fees. The currency ETFs have 3-letter symbols beginning with FX (FXA is Australian dollar, FXB is British pound, FXC is Canadian dollar, FXD is Swiss franc, FXE is Euro, FXY is Japanese yen).
No. of Recommendations: 2
The US deficit is NOT caused by the behaviour of non-US trade partners, whether "fair" behaviour or "unfair". It is caused because the US consumes more than it produces.
Really? Running the deficits we have run, we still have reasonably low interest rates. We still have a rush in of foreign money to fund American debt at what are not outrageously attractive interest rates.
It seems to me that if the US was to somehow mandate that it consume no more than it produced, that there would be no "demand" for foreign money for either capital investment (foreigners buying stock, real estate, etc) or debt financing (foreigners buying T-bills, bonds private debt etc.). Since even with our deficit spending and a significant demand for foreign investment and debt financing, interest rates are not at all particularly high, it seems to me if we stopped consuming more than we produced, the demand of foreigners for US equity and debt would drive our interest rates NEGATIVE. How else would the demand of foreigners for equity and debt investments be brought down to zero, which is where it would need to be in order for the US to consume no more than it produced?
Am I understanding this correctly? That as long as we have open markets in debt and equity and foreigners still "demand" a constant flow of debt and equity to buy that we can never, algebraically, consume only as much as we produce?
Cheers,
R:
No. of Recommendations: 5
I will say I’ve never seen anyone in my life who thought they knew everything about everything as does Jim.
I look forward to a world in which we evaluate our public speakers by how much sense they are actually making, and not by some irrelevant concern about whether they think they are right or not.
Some animals are more equal than others.
No. of Recommendations: 3
FWIW,the name of the Brooklyn bus driver is spelled Kramden 🤷♂️
No. of Recommendations: 18
<<Has American standard of living gone down or up in the last 50 years?>>
With housing as the main criterion I am not that sure how much the standard of living really did increase for a good part of the Western population - especially in the English-speaking countries.
USA 1970:
Average house size - 1240 sq ft
Average household - 3.58 people (346 sq ft/person)
Average number vehicles per household - 1.1
Average garages - 0.8
TV sets - 1.2
Home Internet - 0 (didn't exist)
USA 2020:
Average house size - 2300 sq ft
Average household - 2.55 people (901 sq ft/person)
Average number vehicles per household - 1.8
Average garages - 1.7
TV sets - 2.7
Home Internet - 42.86 Mbps
No. of Recommendations: 14
The US deficit is NOT caused by the behaviour of non-US trade partners, whether "fair" behaviour or "unfair". It is caused because the US consumes more than it produces.
...
Really? Running the deficits we have run, we still have reasonably low interest rates. We still have a rush in of foreign money to fund American debt at what are not outrageously attractive interest rates.
It seems to me that if the US was to somehow mandate that it consume no more than it produced, that there would be no "demand" for foreign money for either capital investment (foreigners buying stock, real estate, etc) or debt financing (foreigners buying T-bills, bonds private debt etc.). Since even with our deficit spending and a significant demand for foreign investment and debt financing, interest rates are not at all particularly high, it seems to me if we stopped consuming more than we produced, the demand of foreigners for US equity and debt would drive our interest rates NEGATIVE. How else would the demand of foreigners for equity and debt investments be brought down to zero, which is where it would need to be in order for the US to consume no more than it produced?
Am I understanding this correctly? That as long as we have open markets in debt and equity and foreigners still "demand" a constant flow of debt and equity to buy that we can never, algebraically, consume only as much as we produce?
Your summary is sound. If the US balanced its budget (or close enough for rock and roll purposes), and the US dollar remained the primary reserve currency, then yes, US bond rates would certainly fall. Negative is pretty unlikely, but definitely lower. Some people demand high interest rates to get them to lend you money, others don't. If you borrow less, you can satisfy your needs with just the second group. The benefit to the US budget is therefore compound: the size of the borrowing is smaller, and the interest rate is lower. The interest rates the US pays are lower than what they would be if the US dollar were not such a popular reserve currency (lower than what another country in the same situation would pay), but the general rules still apply: if you borrow less, you don't have to pay as high a rate.
The last part is a bit off. Non-US persons don't have a huge "demand" for US equity and debt that has to be satisfied by the US running deficits and so forth. It's (almost entirely) the other way around. The high demand of non-US entities for US equity and debt is the capital account surplus, the flip side of, and primarily the result of, the high current account deficit. The two quantities always match (once you remember the weird stuff like central bank actions, which doesn't change the result). If the US current account deficit were to fall a lot, the weirdly high rate of purchases of US assets would also fall.
Jim
No. of Recommendations: 26
So here we are with no visibility more uncertainty than he's [H. Marks] seen in his lifetime and an overvalued market. This surely explains Buffetts large cash position.One could also state this the dimaetrically opposite way; with no visibility and more uncertainty than he has seen in his lifetime, this is an ideal time to be overweight in equities: Raise the cash position when there is (1) a sense of inevitability that markets will keep rising (overconfidence), and reduce the cash position when (2) investors are stressed out and heading for the hills.
We are not longer in the environment of 1, but it seems we aren't really in 2 also - so we have moved from 1 to somewhere between 1 and 2. That could be a sound recipe to have a fairly neutral investment position.
The caveat is that market quotes in fact have not fallen
much - despite that lurking universal sense of uncertainty. The S&P500 is still 7% higher than it was just one year ago. So we have a sense of ambivalence, some dismay, but perhaps not true fear yet (such as you observe when the market quote has fallen 50% or so).
Many are now assuming some sort of mild recession, but very few are mentally framing it a protracted recession, such as we had in the 1970s, 1980s and 2009. But even those 3 larger recessions only each went for 1.5 years (the market taking longer to return to its former real value). Still, even with these 1.5 year long recessions, that just don't have
that much effect on the intrinsic value of your holdings.
Occasional broad market earnings declines are part of the unstable western economic system. There were in the past, and they will be in the future. Don't sweat over it too much. How much do recessions - even these 1.5 year long ones - relate to the value of your holdings? Not much. The value of what you own is the sum of really long-term discounted earnings streams, or put another way; your intrinsic value is a 15x multiple applied to the normalized earnings of everything you own 15 years into the future. What will those 15-year-away earnings be? Now, I can tell you what they are not. The earnings of what you own are not that impacted from the squiggles that the earnings go through in the middle.
What counts is the durability of our earnings and their growth. Think of firms that can be outcompeted unexpected with their current market position up for grabs (retailers), or firms relying on specific market conditions that can change (think niche-semi-conductors etc). These are the kinds of firms to
avoid. Alternatively, tink of firms like Brookfield that have ridiculously predictable earnings streams that don't go out of date, nor suffer from competitive destruction that most firms have to put up with each year, and capable to reinvest earnings to expand compounding-style without having the market saturation problem such as Apple. Or think of firms like Berkshire that have a natural leveraging advantage in the business model (by exposing some of the investment float to equities) and hands-off shrewd-accountant-style that avoids VCVC (vulture capital vanishment culture).
I also can't help notice pretty good bargains around right now. Google stands out, which I wrote about here -
https://www.shrewdm.com/MB?pid=32137596 - and Meta are interesting today also. I recently wrote about Meta here also -
https://www.shrewdm.com/MB?pid=144903753- Manlobbi
No. of Recommendations: 13
So here we are with no visibility more uncertainty than he's [H. Marks] seen in his lifetime and an overvalued market. This surely explains Buffetts large cash position.
Mr Buffett is smart, but not prescient. Remember that the extra-large cash pile was built before any of the latest chaos, and before the election. Though he may have foreseen some general weak spots here and there in the economy, it seems clear it was mostly valuation based.
Jim
No. of Recommendations: 7
We are not longer in the environment of 1, but it seems we aren't really in 2 also - so we have moved from 1 to somewhere between 1 and 2. That could be a sound recipe to have a fairly neutral investment position.
The caveat is that market quotes in fact have not fallen much - despite that lurking universal sense of uncertainty. The S&P500 is still 7% higher than it was just one year ago. So we have a sense of ambivalence, some dismay, but perhaps not true fear yet (such as you observe when the market quote has fallen 50% or so).
Which is perfectly in line with how a true long bear market (versus a crash) develops:
A) After the "It´s going up - as it always does" a phase of dwindling enthusiasm, higher volatility, ups and downs, many "getting out", but also many "buying the dips", with the market effectively loosing not too much = Jim´s obervation of "3 months after the top usually only 10% down"
B) Followed by less and less more market participants "buying the dips" as it´s seen more and more as risky, therefore less counter movements and the markets then truly going down from then on, accelerating as longer it last as real depression sets in and the "last men standing" are becoming less.
Your words "uncertainty", "ambivalence" for me perfectly describe where we are now: In phase A. Therefore no "buying the dips" for me, but the need for that which I never had in my life: Patience.
No. of Recommendations: 2
Mr Buffett is smart, but not prescient. Remember that the extra-large cash pile was built before any of the latest chaos, and before the election.
Is there any way, yet, to glean if Berkshire sold any more Apple or Bank of America in the 1st qtr of 2025?
I wonder if he raised more cash after seeing Trump's cabinet and game plan.
No. of Recommendations: 16
Jim wrote:
Mr Buffett is smart, but not prescient. Remember that the extra-large cash pile was built before any of the latest chaos, and before the election. Though he may have foreseen some general weak spots here and there in the economy, it seems clear it was mostly valuation based.
I agree it's unlikely that Buffett foresaw the latest chaos when building the extra-large cash pile. After all, Berkshire's latest known sales of Apple shares were before the election. I do think, however, that Buffett might have been influenced by elevated geopolitical tensions in recent years, especially between the U.S. and China.
At the 2024 Annual Meeting, Buffett said the following about building the cash position:
"But I don’t mind at all, under current conditions, building the cash position.
I think when I look at the alternative of what’s available in the equity markets, and I look at the composition of what’s going on in the world, we find it quite attractive."
Taking his comments at face value, there were two main reasons for building the extra-large cash pile: (1) valuation, and (2) "the composition of what’s going on in the world." While reason (2) could mean any number of things, it would not surprise me if deteriorating geopolitical tensions with China played a role. After all, that's basically the reason he gave at the 2023 Annual Meeting for why he quickly exited TSMC in early 2023:
"Taiwan Semiconductor’s one of the best managed companies and important companies in the world. And I think you’ll be able to say the same thing five, or ten, or 20 years from now.
I don’t like its location. And I’ve reevaluated that. I mean, I don’t think it should be any place but Taiwan, although they will be, obviously, opening up chip capacity in this country.
...
But marvelous people and marvelous competitive position and everything, I’d rather find it in the United States.
I feel better about the capital that we’ve got deployed in Japan than Taiwan. I wish it weren’t so, but I think that’s the reality. And I’ve reevaluated that in the light of certain things that were going on."
Also, in recent years, Berkshire has sold most, if not all, of its stake in BYD.
So, in a way, I think Buffett was "prescient," at least to the extent the current chaos is a symptom of geopolitical tensions between the U.S. and China. Presumably, he did not foresee the way things would actually play out. But he seems to have been preparing for the elevated risk of negative events with respect to China. Coincidentally, that also seems to have prepared Berkshire for the latest chaos in the U.S.
No. of Recommendations: 6
FWIW,the name of the Brooklyn bus driver is spelled Kramden 🤷♂️
Also not Raplh. It is my mistakes that make me who I am.
No. of Recommendations: 1
😎
