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As we know, Warren Buffett has built up a huge cash pile. Warren has been to said by many to be one of the markets best market timers as he has a history of being roughly in sync with getting out of the market ahead of market swoons and later taking advantage of market swoons. He has done this several times going back to the 1960s.

I have been playing the part of a general contractor in recent weeks in getting a property we had been renting to paying parties since 2010 ready to go on the real estate market this spring. This is my own form of market timing as my bride and I shrink our physical income paying assets into liquid assets. For you younger folks who may have not had the experience of dealing with a dead relative's properties, the physical stuff like cars, homes, land, boats, commercial properties and the like that are not liquid can require a lot of work. This is especially true if the relative were a pack rat, did not take care of their property and the like. Yes, a lot of work. At any rate, in my acting as a general contractor, I have been working with sub-contractors for painting, granite counter tops, new flooring, HVAC replacement, pressure washing and lots of other things to be done. In Central NC where I live, our public schools in our city are 57% Hispanic origin students according to the boxes they checked on their required forms. I cite this so you can get a quick take on my community. The majority of the contractors I am using (these are folks who own their own companies) are folks who have moved to the USA from Central or South America and have US citizenship. This week these contractors are separately telling me about Spanish speaking folks they know all around the USA who are not going to work for fear of being picked up and deported. One long time contractor and a personal friend told me of his two brothers and what they are seeing. One brother is in Salinas, California and is a field hand for berry farmers. He says no one is in the fields picking berries and vegetables this week. They are all staying in their abodes because they are afraid of being picked-up by ICE. His brother in Washington state gives the same story and says the winter pruning activities for the apple orchards has ceased for the same reason. Another person who I have long worked with told me of his relatives in Illinois, Texas and Florida who are not going to Walmart or other retailers because they are afraid to leave their homes. This same person told me of three of his friends in Florida who were working in the construction industry picked up and moved back to Mexico because of their illegal status concerns. My friend says there is a problem for these three gentlemen moving back to Mexico - there are no jobs available in Mexico. This is also concerning because if a large population of folks move back to Mexico and are unemployed, this has the potential to create unrest and who knows what else in Mexico, our neighbor country to the South.

The purpose of bringing this up is to say unintended consequences could put a big hurt on the US economy and to also jack up inflation in food prices, construction costs and more. This could lead to blood in the equity streets and an opportunity to buy stocks at much cheaper prices perhaps later in 2025. Could Warren have foreseen this last year when he was raising Berkshire's enormous cash pile?

Uwharrie

wow! I had no idea the US economy was so dependent on influx of illegals who came into the country in the last 4 years.

I learned something today.

wow! I had no idea the US economy was so dependent on influx of illegals who came into the country in the last 4 years.

It has always been that way. Certain sectors of the economy like agriculture, meat packing, construction, restaurant work, etc. have always relied on undocumented labor for a variety of reasons.

The reason it has always been that way is pro-business politicians want it that way. The majority of undocumented immigrants enter the country enter at legal checkpoints and either over stay their visas or apply for asylum and never complete the process. In large part because immigration courts are so backlogged the applicants are given court dates five years in the future, which gives the applicants plenty of time to blend into the background.

One thing that would be a huge help in this regard is to provide funding to track visa overstays. But probably more important is raising the standards for asylum application (which are very low), providing adequate detention facilities such that those who don't qualify for asylum can be detained (there is a critical shortage of these types of faculties, and so they must be released), and funding immigration courts such that applications can be decided in a timely fashion.

Just such a bill passed the Senate this spring, but died in the House. There are five immigration bills slated to come up in the House this spring. None make illegal immigration any more difficult or address any root causes of illegal immigration. Mostly just increasing penalties for crimes committed by undocumented immigrants, which is just locking the barn door. It is hard to come to any conclusion other than they don't want to do anything about it.

Logically, making it difficult to for undocumented to find jobs might have a real effect in this area. To that end the US government has a system called E-Verify can verify the immigration status of job applicants. It mostly works as described. In 2023 the Florida legislature mandated its use for most employers.

As we know, the Florida Government is quite outspoken on this issue. But it turns out the executive branch never did any compliance monitoring as mandated by the legislature. Literally none. Again, it is hard to come to any conclusion other than he doesn't want to do anything about it except talk.


https://www.tampabay.com/news/florida-politics/202...

“The purpose of bringing this up is to say unintended consequences could put a big hurt on the US economy and to also jack up inflation in food prices, construction costs and more. This could lead to blood in the equity streets and an opportunity to buy stocks at much cheaper prices perhaps later in 2025. Could Warren have foreseen this last year when he was raising Berkshire's enormous cash pile?”

No. Buffett raised a huge cash pile before the election. The most likely explanation is he felt the prices of those individual companies was too high and took some gains off the table. The sell high part. When he will get to do the other part and buy low is anyone’s guess, as I’m sure Buffett would tell us.

It’s not bad to have a lot of cash around right now.

The reason it has always been that way is pro-business politicians want it that way


Allows them to under pay them and get away with various safety/health issues since the workers can't afford to cause trouble.
And if strictly enforced it will lead to inflation in food prices, restaurants, and other industries. In technology you have the H1B visas that Musk is so fond of, that is largely due to being able to pay those workers significantly less money.

While there needs to be a proper way to get people to do this work, cracking down in a severe way is just going to hurt the economy significantly. Many of these people are a net plus for the economy.

I was on a plane trip a few months ago and was sitting next to a young lady. She was from Mexico and was working in Maryland picking crabs. She had some contract for "x" months of work and got paid per pound of crab meat picked. For every job like that which is done legally, there are many more that go the illegal route.

My wife's family history goes back to Mexico. Her parents have both passed away. One was born in Texas and the other in Mexico and eventually gained citizenship in the US. Her father made all 3 kids work a summer in the fields picking cotton or whatever. He wanted them to see the importance of getting an education and it worked.

Rich

Thanks for your comments everyone.
OT:

< cracking down in a severe way is just going to hurt the economy significantly >
...and a whole lot of people.
:-)Shawn

Most consequences that politicians describe, after the event, as "unintended" are readily predictable in advance. This situation appears to me, from outside the US, as once such. This begs the question, why.

Most consequences that politicians describe, after the event, as "unintended" are readily predictable in advance. This situation appears to me, from outside the US, as once such. This begs the question, why.


Collapsing the economy opens up huge opportunities for looting by people with a lot of cash.

And it throws a bone to a wildly misinformed group of people who have been indoctrinated for decades into believing that "illegals" are raping, looting, and murdering their way across the borders and through America. I expect they'll move on to "deviants" being responsible for their woes after the "illegals" are sufficiently suppressed yet things don't get better for them.

In our builders supply and millwork businesses in the Piedmont of NC (and other states) that serve contractors 90% of our customers come in with unabridged support of anything the current head honcho does. As soon as those customers walk out the door all of us owners have the precise conversation that Uwharrie is referring to.

Polar opposite views. What we do know? We know that in many of the sub contractor businesses such as framing, pouring concrete, masonry...et als that 99.99999% of those working are the population Uwharrie was referring to. And I also know personally that when you pay them almost all will ask that you pay part in cash. Connect the dots.

Guessing in the more booming areas of NC, and there are plenty, 20-40% of those in these sectors of construction are not legal. It is what it is, not awfulizing or doing the grievance dance nor supporting.

Life is great...if you can stand it. I'd love to see anyone in our area try to get something build without this segment of a segment of our residents. The bottleneck will set you back years to get things completed.

Locals to take these jobs? You'd have to get their faces out of their cell phones and bodies out of mom and dad's house...and outside...you know that area between the house and the car that they basically don't do and anyway are in such bad physical condition it isn't possible.

This discussion started out as a possible explanation of why Mr. Buffett may have raised so much cash by selling large blocks of stock: to-wit, that he foresaw the outcome of the U. S. presidential election and the ensuing tighter enforcement of U.S. immigration law. Subsequent posts made the case that tighter enforcement of the immigration law will have a negative impact on the U. S. economy and presumably on the U. S. stock market.

The question now is should more stock selling take place to prepare for this Armageddon?

To this thread subject let’s add how there have been times when the US economy has made a sudden move upon hearing or seeing a pronouncement or action by the government’s leadership. Example: Gerald Ford gave a speech to the Future Farmers of America convention in the fall of 1975. He made a point about Americans needing to “bite the bullet”. This set off a sudden drop in the economy as folks stopped buying cars, TVs and other US manufactured big ticket items. This all aligns with Cialdini’s book, “Influence” as Social Proof movements in the larger population. I was a twenty something when Ford made the speech and the Fortune 500 company where I was employed had layoffs two months later because a sudden drop in sales of our consumer disposable products. Just saying history shows how Newton’s Law of Actions & Reactions coupled with human instinctive Social Proof programming can quickly wallop a strong economy.

Maybe some of the quality companies I’ve been researching the last two years will drop down by 30% to the Buffet 10:1 pre-tax to market cap ratio zone. I’d sure love to get a 4% dividend and a rise back to a normal PE via purchasing at a blood in the streets valuation to snag several beautiful companies with respectable moats currently selling at slim/no margin of safety PE ratios.

One more aspect to consider - Michael Burry and others have made comments about how the system has limited size/number of exits should the regime of net positive inflows to indexes go tidal and go net negative (outflows)in a high volume manner. With active funds now having little or no funds available to swing in to scoop up bargains, even Buffett’s 400 B will not fully offset the market retrenchment.

Maybe this leads to Buffet’s last big investment opportunity set.

Interesting and potentially advantageous to us investors with cash and intestinal fortitude.

Uwharrie

Uwarrie

Unintended consequences I’d agree. But unforeseen consequences? I don’t think so, even among proponents.

I recall Musk saying a few weeks before election “there could be pain before we get the benefit”. I think even Musk & probably Trump saw near term dislocations that could be quite impactful. We can debate how long or permanent those “dislocations” may be…that’s another issue.

Buffett’s raising cash was a risk/reward decision on the high valuations and lack of specific opportunities. Period. And before he knew outcome of elections. He has NEVER invested on politics and never will.

If prices were 30% lower Buffett would have $50 Billion in cash.

Buffett does not speak publicly of politics but I do think he has interest there. I think it is logical today to believe that we'll have some disruption and chaos within some shorter period of time coming up.

Coupling that to an expensive market in most respects gives reason for cash. The other thing is simply a quick realization that maybe the market of businesses Berkshire would have to pay up for is not deemed by him to give returns much above the short term Treasury rate.

Central Florida - early 1970s. Payroll has to occur, taxes paid, etc. The workers are illegal immigrants from Mexico. The company provides the crew foreman the SSNs that will be used. The illegals use these for the period of a few months snd move on once they are made aware or discover better and easier opportunities elsewhere. Quite a few are skilled in construction. Most are here for the opportunity the US provides and are willing to work hard.

possib. sn jose news, but story last week was 45% of field workers in salinas area did not show last monday. and 75% did not show last btuesday.......those crops are probably rotting by now....

because it works for all parties involved.....including in mexico etc

“Buffett does not speak publicly of politics but I do think he has interest there.”

Respectfully, yes he does. Not often, thankfully, but he has—including yesterday.

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