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2026 YTD price performance as of 5/3/26.

SP500  5.62%
RSP    5.88% (sp500 eq weighted)
DFVE   8.31% (fortune 500 eq weighted)
QQQE   7.88% (nasdaq 100 eq weighted)
FSMAX  8.97% (total US mkt ex sp500)

Berkshire  -5.9%
Markel     -17.23%
WRBerkley  -5.33%

international
VXUS   9.98% (all developed markets ex-US plus emerging)
VSS    10.04% (region same as above but small cap)
INDA  -9.12% (india)
IDEV   6.9% (MSCI international)
EEM    17.22% (emerging)

alternative asset
BN    -1.44% (brookfield corp)
BAM   -8.42% (brookfield asset)
APO   -9.88% (apollo)
ARES  -26.38% (ares)
BX    -18.03% (blackstone)
CG    -16.36% (carlyle)
KKR   -18.67% (KKR)
OWL   -33.20% (blue owl)

Performance comparisons are fine to look at but people can pick different start/end points to make their points. The only ones that really matter are when you bought it and when you sell it.

Isn't the s&p and qqq up prob YTD just because of Nvidia, Alphabet and Amazon?

Isn't the s&p and qqq up prob YTD just because of Nvidia, Alphabet and Amazon?

To an extent. Size alone has not been an advantage. Perhaps surprisingly, the S&P 500 and the S&P 500 Equal Weight are up identical amounts year to date. The largest firms have not been outperformers.

But tech-leaning firms as typified by Nasdaq listings have done better than the rest, and huge tech-leaning firms have done better than merely very large ones.

Year to date price-only return
RSP 5.3% (S&P 500 Equal Weight)
SPY 5.3% (S&P 500 float adjusted cap weight)
QQQE 7.7% (Nasdaq 100 Equal Weight)
QQQ 9.5% (Nasdaq 100 broken cap weight)


To a first level, you hear a lot of talk about the irrational exuberance going on.
To a second level, that is rebutted by the observation that forward earnings estimates have actually risen more than the market has: forward P/E ratios have dropped, not risen.

I lean towards a different line of thinking: it's mostly exuberance, but it's showing up in the unrealistic earnings forecasts.

Large swathes of the world economy are headed for a world of hurt over the next 18 months even if there is a sudden outbreak of peace everywhere. Which there won't be. Few companies anywhere will be unaffected.

Jim
(all loans paid, and the remainder 70% cash)

Debt free and 70% cash…
I like it. Now the hard part…waiting.

The danger with holding cash is the risk of drifting into mediocre investments, especially things we understand less than and of lower quality than something like Berkshire. I say this having fallen into that trap to some extent in the past.

I have to respect the discipline of the capital allocators at Berkshire. People are screaming at them to do something. Crickets…

A reminder from Gemini on Munger’s Daily Journal spear fishing!

The story of Charlie Munger’s management of the **Daily Journal Corporation (DJCO)** is a masterclass in extreme patience. For decades, the company was a simple, cash-rich publishing business. Munger, who served as Chairman, allowed cash to accumulate for years, refusing to invest in an overpriced market.
Everything changed in the first quarter of **2009**, at the absolute "nadir" of the Great Financial Recession.
### The Timeline: Years of Inactivity
* **The "Wait" (Pre-2009):** For years leading up to the crisis, the Daily Journal held its excess capital almost exclusively in **U.S. Treasury Bills**. While other companies were diversifying or making acquisitions during the mid-2000s boom, Munger did nothing. He famously said that "waiting helps you as an investor, and a lot of people just can't stand to wait."
* **The Move (Q1 2009):** In February and March 2009, with the banking sector appearing to be in total collapse, Munger finally pivoted. He abandoned the safety of Treasuries to "plow" the company’s cash into the very sector everyone else was fleeing: **Banks.**
### The Sums Involved
Munger didn't just nibble; he deployed nearly all available liquid capital at the bottom of the market.
* **Total Initial Investment:** Approximately **$20.4 million**.
* **Concentration:** This represented roughly **71%** of the company's total cash and equivalents at the time.
* **The Holdings:** He concentrated the money into just four primary stocks:
1. **Wells Fargo (WFC):** Purchased near its all-time lows (around $8/share).
2. **Bank of America (BAC):** Bought when it was trading under $5/share.
3. **U.S. Bancorp (USB)**
4. **POSCO** (a South Korean steel maker)
### The Result: Rapid and Massive Returns
The timing was nearly perfect. Within months, the market bottomed and began a historic bull run.
* **By Sept 2009:** The initial $20.4 million had already generated over **$34 million in unrealized gains**, more than doubling in less than a year.
* **Long-term Growth:** By 2012, the portfolio had grown to **$76.7 million**. By the time of Munger's passing in 2023, the Daily Journal’s stock portfolio was valued at approximately **$300 million**.
* **Dividend Income:** By 2015, the portfolio was generating **$3.8 million in annual dividends**—a massive sum for a small publishing company whose total annual revenue was only around $35–40 million.
### Munger’s Philosophy on the Trade
Munger often used this event to illustrate his "spear-fishing" philosophy. He believed that an investor should sit quietly for a long time, and then, when a "fat pitch" comes, they must swing with everything they have.

"It takes character to sit there with all that cash and do nothing. I didn't get to where I am by going after mediocre opportunities." — *Charlie Munger

"It takes character to sit there with all that cash and do nothing. I didn't get to where I am by going after mediocre opportunities." — *Charlie Munger

Interesting anecdote and quote. Unfortunately it is not relevant to Berkshire under Abel who needs to allocate $370 billion not $20 million. The other point is that one of the reasons why Bekrkshire is sitting on so much cash is Buffett did not behave like Munger did with a much smaller company. He was only modestly active in 2008 and in 2020 he was selling rather than buying when the market was really stressed.

Any mediocre management of a conglomerate can defend the inability to deploy capital by saying they are just waiting for the ideal pitch and till they find it shareholders should let their capital build up as cash and trust them. With Abel rather than Buffett in charge, I expect him to treat disciplined capital return as a viable and rational capital allocation alternative. I would have to see his capital allocation in practice before building up trust in his ability to effectively compound the amount of capital he has to at Berkshire.

Munger didn't just nibble; he deployed nearly all available liquid capital at the bottom of the market.
* **Total Initial Investment:** Approximately **$20.4 million**.
[...]
Munger often used this event to illustrate his "spear-fishing" philosophy. He believed that an investor should sit quietly for a long time, and then, when a "fat pitch" comes, they must swing with everything they have.


The fact that DJCO was able to opportunistically invest $20 million hardly seems relevant to Berkshire sitting on roughly $300 billion (and growing) in cash.

I understand giving Berkshire management the benefit of the doubt, and refusing to yell "Swing, you bum". At the same time, if one is comfortable with Berkshire amassing this mountain of cash, it seems odd to believe that the firm deserves anywhere close to the price/book ratio it historically has.

Munger didn't just nibble; he deployed nearly all available liquid capital at the bottom of the market.
* **Total Initial Investment:** Approximately **$20.4 million**.
* **Concentration:** This represented roughly **71%** of the company's total cash and equivalents at the time.
* **The Holdings:** He concentrated the money into just four primary stocks:
1. **Wells Fargo (WFC):** Purchased near its all-time lows (around $8/share).
2. **Bank of America (BAC):** Bought when it was trading under $5/share.
3. **U.S. Bancorp (USB)**
4. **POSCO** (a South Korean steel maker)

I don't mean to be "that guy", but... that's not quite correct. I think your AI got the order of these investments a little scrambled.

2009:
Munger spent $15.5m to buy mostly WFC and a little USB. He also spent $4.9m buying a corporate bond yielding over 10%. It was never disclosed what bond or note he purchased, but I strongly suspect it was the Altria 10.2% 30-year notes that were issued by Philip Morris USA that summer. He sold those bonds in the first quarter of 2018 because the bonds had appreciated in value due to the fall in interest rates.

2011:
Next came the investment in foreign manufacturers. $11.1m was invested in Posco (PKX) and the HK-listed shares of BYD. Posco was kinda ho-hum and was divested, but BYD after a very slow start (and continued added investments by Charlie in subsequent years) has been an absolute home run. However, lately the BYD has been partially sold to take advantage of a large gain.

Lastly, in Q4, 2011, Munger purchased BAC for the DJCO portfolio making a $13.6m investment. Notably, this was around the time of Buffett's convertible preferred deal with BAC. All of the bank positions were slightly trimmed by the new DJCO CEO in order to pay down some of the DJCO margin debt.

I hope that was helpful and doesn't detract for the spirit of your post.

Bill

Hello Bill. That is helpful on two counts.

Accurate information on Charlie’s moves at DJCO.

A nice illustration of how useless AI is compared to human intelligence, reason, experience and work. Articulate but factually incorrect to varying degrees. Great for replacing certain types of jobs - ones with low impact if they are done badly. But not so great for many tasks that have important consequences.

AI nil, human knowledge 1.

Thank you for posting.

Hello Bill,
I was briefly talking to Charlie’s friend Monish Pabiri on Sunday. I realised after, I could have asked him about Journal Technology and the SaaS apocalypse. After, I noticed he bought Constellation Software recently and know he came from a software background. I would like to think I would not take his view too seriously anyway but would have been interested.

I know Steven Myhill-Jones was of a view, a couple of years ago that Journal Technologies would use new technology tools and get them working for the platform with the aim of bringing more customers into the network to get a momentum of better and better solutions and sharing that cost over a larger and larger customer base but that there are no guarantees. Certainly, we know other software developers are getting major cost savings from the new tools with drastically reduced timeframes for pushing through software changes. Then on the other hand you may eventually have less employees within the customer headcount, which means they need to increase the per user license fee. Then there is the threat of new entrants with access to new tools and an advantage of not having legacy software debt. Maybe Charlie’s points that switching costs are high with Journals Technologies customers base and the niche is not big enough for large software providers still holds. Have you heard anything recently about how Journal Technology is getting on?

Have you heard anything recently about how Journal Technology is getting on?

I don't have an informed opinion on Journal Tech, I'm afraid.

I do like to estimate its imputed market value from time to time, using what I know about the six securities that the Daily Journal owns in its portfolio.

Without getting into the weeds, at the moment, using current market values (and not fair values - which I don't really have a good handle on) I get an after-tax, net asset value of the marketable securities (adding in cash & subtracting the margin debt & taxes discounted to the present) of ~$280 per DJCO common share. .

If I assume a value for the legal newspaper of, say, $25m (basically valuing it at its downtown LA real estate), then the current residual value of Journal Tech is approx. $218 million at this moment. Of course, that residual value swings a lot based on the day-to-day prices of the marketable securities.

Still - the current number equates to an EV multiple on TTM revenues of 3x and an EV multiple on EBIT of 16.5x. That seems reasonable, but perhaps not super-cheap.

FWIW,
Bill

Updated YTD price performance as of 5/5/26. Yes it's just one data point. Doesn't say anything about the relative long term investment merits of the items on the list.

Nevertheless, a few things stand out. SP500 and RSP are the same which means optimism is broadening and earnings estimates are rising across the board. The Fortune 500 eq weight, where the index is based on revenue rather than market cap, is a full 2% higher than RSP. This must be an indication of something, not quite sure what. Extended Market (total US market ex sp500) is up 10% which is even more evidence of broadening since these are all mid cap and small cap. Nasdaq 100, both Cap and eq weight, are doing just fine which is no surprise given the AI boom and the continuing and increasing capex spending.

Last but not least, Global ex US continues to outperform. It handily beat SP500 last year and the outperformance is continuing.

In summary, the rise is Global. Large, Mid, Small, US, International, Emerging ... everything is up "bigly"! This is remarkable given inflation expectations increasing, the UST 10YR nominal at 4.45#, UST 10YR Real near 2% and oil about 110. If you knew all the news headlines in advance at the beginning of the year, this is not the outcome you would have predicted!

SP500	6.04
RSP	6.10 (sp500 eq weight)
DFVE	8.10 (fortune 500 eq weight)
FSMAX   9.96 (total US market ex sp500)

QQQ     10.95 (nasdaq 100 cap weight)
QQQE    8.71 (nasdaq 100 eq weight)

VXUS    10.53 (global ex-US)

BRKB    -7.39 swing you bum <:-)

This must be an indication of something, not quite sure what. Extended Market (total US market ex sp500) is up 10% which is even more evidence of broadening since these are all mid cap and small cap.

A bit more to consider: revenge of the retail traders.

From a recent article at the FT:

The share of US households that own stocks has surged this decade to nearly 60 per cent...
Americans are all in on the market, holding more wealth in stocks than in their homes for the first time...
Retail’s share of daily trading in US stocks doubled in the past 15 years to 36 per cent, surpassing that of big banks or hedge funds...
Last year US retail trading topped $5tn, exceeding the pandemic high... So far in 2026 they have remained net buyers on most days.

...and perhaps most surprisingly for the traditional dumb money:
According to Empirical Research Partners, retail investors have “trounced the professionals” by going double overweight on the “most controversial” momentum plays including, for example, those that have seen “supernova” price rises. Their favourites include precious metals and above all AI stocks. Last year, retail investors beat the S&P 500 by a solid 10 percentage points.


They finish up:
Still, markets cannot keep going up forever. The mania for AI-led momentum stocks will cool some day. An inflationary shock or the challenge of mounting government debts could eventually slow or reverse the endless flow of liquidity, and even restrain the next bailout. When that happens, it will shake the confidence of the retail crowd and turn these confident buyers into aggressive sellers.

https://www.ft.com/content/ee8a0604-84cb-44da-bb33...

As an interesting example, the silver bullion ETF dollar trading volume matched the trading volume for SPY on one recent day.

Jim

This makes me wonder about the impacts of a sea change in money flowing in. It's not just that retail (investors) are more active, it's that that group is also higher impact in total volume - as a trend.

This would imply that continued rise/fall in the market over longer term (the investing climate) as well as the shorter term impacts (the weather) is headed for more severe events.

Precipitated by:

MOMO
FOMO
Investing/gambling much closer to immediate funds needs
investing share of wallet rising beyond traditional savings levels (i.e. 10% beyond a rainy day fund)

Examples in my circle:

People are starting Roth IRAs for their minor children who "work in the family". 1099 included, but, perhaps not any actual time behind the weather news desk.
Children and younger acquaintances are not only poly market, but also robin hood, coin base and real actual brokerage accounts in schwab, etc.
Like many of you fellow weather forecasters, I'm getting more and more requests for hot takes on the adjacent storm on the horizon - as I have seen a tornado before in person and not just on an instagram story.

Speaking of weather, the global derivatives market is seeing a continued surge in trading on the CME.https://www.cmegroup.com/openmarkets/energy/2024/W...


Beyond that, wall street bets and r/investing have traffic and activity that confounds mature logic. The point is not good advice, good results, but that the trend and share of attention at younger levels is as high as any time - ever.

Options are the primary currency as these are the path to best performance (alpha and risk? :D)

10-50% of portfolio is in short 0-DTE and other short term options.

As the heat island increases in intensity due to inheritance, share of wallet, broadening participation, the impacts and affected areas will increase.

This may bring much needed rain (or, perhaps extending drought) to your area.

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