Halls of Shrewd'm / US Policy
No. of Recommendations: 27
FWIW, Berkshire's market price is down 3.7% in the last 7 trading days. Meh, it happens.
But it's worth noting that the trade-weighed US dollar is *also* down 3.7% in those same 7 trading days. So any measurement in US dollars is a bit misleading lately, whether it's Berkshire shares or gold or haircuts. In general purpose purchasing power terms, a Berkshire share is down 7.2% in that short stretch. (and anybody paid in greenbacks just got a 3.7% pay cut)
Prices move up and down. Maybe it will unwind. This is not a thing you can extrapolate. But it's quite a sharp little move.
One simple way to visualize it is to glance at a chart of the price of WIP, which is a basket of non-US inflation protected bonds and generally holds a steady value in terms of global purchasing power. This year it's up (measured in shrinking dollars) from $39.39 to $41.10, up 4.34%. Doesn't sound like much, but it "should" normally be pretty flat.
I expect to see articles in the papers tomorrow about how the Euro has soared, which they will probably ascribe to some speech in Brussels. And gold, which they will ascribe to market panic. This will be just a naive misunderstanding...neither gold nor the euro popped up, the dollar fell.
Jim
No. of Recommendations: 8
I expect to see articles in the papers tomorrow about how the Euro has soared, which they will probably ascribe to some speech in Brussels. And gold, which they will ascribe to market panic. This will be just a naive misunderstanding...neither gold nor the euro popped up, the dollar fell.
Yeah, but the dollar price of gold doubling in a year isn't just an inverse dollar trade.
Elan
No. of Recommendations: 4
Jim, now that you've mentioned WIP twice I'll write that I ran across it back in March of 2025 and made an investment there. I added some when you mentioned it recently.
Was hoping for a tad of interest return with a bit of price increase at best. It has exceeded that expectation quite a bit!
No. of Recommendations: 1
Berkshire share is down 7.2% in that short stretch.
Could this be due to BRK position in Japan and concerns about currency exchange with US dollar? For the first time in years, one of the securities in my schwab account was borrowed for short selling. It was a Japan ETF. The last time a security was borrowed from my account, it signified so much shorting activity that it was hard to find shares to borrow.
No. of Recommendations: 13
Berkshire share is down 7.2% in that short stretch.
...
Could this be due to BRK position in Japan and concerns about currency exchange with US dollar?
Anything is possible, but that reasoning doesn't really work for those who really pay attention. Berkshire's position in the Japanese firms is fully hedged. i.e., Berkshire has an amount of yen debt that equals the position size so Berkshire gets the yen price change but in US dollars.
Besides, I can't ever recall any meaningful correlation between big moves in big Berkshire positions and the move in Berkshire's stock price. The most remarkable example was that Berkshire's price and Apple's price were most often negatively correlated during the era that the Apple position was particularly huge. Forget look-through value, it was all about traders seeing one risk-on company and one risk-off company.
Jim
No. of Recommendations: 4
Jim, now that you've mentioned WIP twice I'll write that I ran across it back in March of 2025 and made an investment there. I added some when you mentioned it recently.
Was hoping for a tad of interest return with a bit of price increase at best. It has exceeded that expectation quite a bit!
I too have been pleasantly surprised. Alas I bought only a token position, but it looks good in percentage terms : )
It's an odd security to analyze if you're trying to make sense of the price history. Being a mix of non-US currencies, it will always do better (measured in dollars) when the US dollar is falling. So far, so simple.
But the thing that is hard to wrap your head around is that the yield can show up as a price in crease, as coupons, or as a mix of the two, based on the trajectory of global inflation expectations and real yields. Lately the coupon has been falling and the price rising. The main lesson is not to assume that a poor (or good) price trajectory is enough to tell you how it's doing...you need to look at both.
Conveniently, stockcharts includes reinvested dividends by default.
Jim
No. of Recommendations: 1
Just to clarify then, the current yield of 5.52% yield is inclusive of the rise of the basket of foreign currencies against the dollar?
No. of Recommendations: 6
Just to clarify then, the current yield of 5.52% yield is inclusive of the rise of the basket of foreign currencies against the dollar?
It's a good news / bad news thing.
No, that's truly the recent yield, not counting on price movement at all. But the monthly coupons have been falling on trend for a while, so it won't last.
That in turn is partly made up for by a rising NAV and market price.
Great idea for a security, but maddeningly difficult to really understand the individual moving parts and how they interact with changes in prevailing yields. Inflation protected bonds in general do what they say, but not in the intuitive WAY you'd expect.
For me the annoyance is that all the underlying bonds have no dividend withholding tax, being government issued, but because of the US corporate wrapper there is a 30% withholding tax on all the distributions anyway. I get no credit for that, so it's a straight 30% off the top. So any cyclical switch towards price appreciation rather than coupons is one of the strange subtleties that is good for me.
Jim
No. of Recommendations: 1
I was feeling good about my April purchase of Platinum, bought because I thought the Platinum:Gold ratio should get closer to historical norms. You're right the entire gain isn't what it appears.
