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I thought about some theories last night. Some pretty idiotic, but you have to be creative:

1. Tech people/AI people (e. g. Apple) are finally discovering that tech could be overpriced and shifting to safe heaven (Berkshire).
2. Cryptocurrency people finally acknowledge that Munger was right (... is worthless) and shifting to safe heaven (Berkshire). 🙂
3. The selling pressure of the Bill and Melinda Gates Foundation has stopped, because they are getting no Berkshire stocks anymore.
4. Buffett wants to do something big and it is easier to do something big in an overpriced world with an overpriced Berkshire stock (like General Re in 1998).
5. There is a big acquisition going on.
If there is a big acquisition, he could be repurchasing shares. That could be the reason why he stopped buying Occidental shares at lower prices.
Thomas Gayner (Markel) in a recent interview: "About Berkshire’s eventual sale of the 3.5% position in his company, Gayner added cryptically, “There are other things going on that I’m not at liberty to talk about.” Your guess is as good as mine on that one.
https://www.kingswell.io/p/markel-ceo-tom-gayner-t...
6. The P/B valuation method gets less and less relevant.
7. Buffett wants highest flexibility for him and his successor. He doesn´t want Greg to do all the hard capital allocation decisions (+ tax reasons).
Cash has the highest flexibility and has a good risk-free yield.
8. Statistically we are closer to the next recession and in a recession Cash is king.

Any comments?

I think it may has to do :
1. Brk was approaching trillion dollar mktcap. Due to indexing, the bigger the mktcap, the more money for the index goes into the individual name with highest mktcap.
2. It’s almost certain Barron will have an article during the weekend talking about Buffett’s birthday and trillion dollar mktcap. People are front running the article.
3. A lot of call writing. Options are expiring this weekend. People need to buy new stocks or buy back calls to avoid their stocks being called away and pay capital gain tax.
4. investors are moving money out of the mega growth tech names into mega value names. Maybe there’s money flowing into financials (and that’s why Buffett is able to sell so many BAC), bringing BrK along, which is not really that liquid compared to other big names in XLf

" The selling pressure of the Bill and Melinda Gates Foundation has stopped, because they are getting no Berkshire stocks anymore."


that's 100 percent wrong.

1. Brk was approaching trillion dollar mktcap. Due to indexing, the bigger the mktcap, the more money for the index goes into the individual name with highest mktcap.

It's true that a whole lot of money goes into index trackers like clockwork at the end of each month, due to scheduled payroll savings plans. Traders often like to scalp them by buying a few days earlier.

But in this case the other explanation seems simpler: market going up, Berkshire tracks the market closely over short time periods, so Berkshire goes up.

Lately the rally has been concentrated in financials including Berkshire, and even more so among insurers. Look at the graph of KIE (insurance ETF) versus Berkshire in the last year. Come back in a few minutes and you won't be able to say which graph is which.

Jim

I feel 5-8 are all plausible. I feel the market knows that Berkshire is going to experience a surge in earnings due to a trimming of 40 years of fat by Abel that has accumulated operationally.

Buffett always said he wanted to buy businesses that were so good that monkeys could run them. And I believe many of his acquisitions were excatly that, including the monkeys.

Buffett promised to leave those people alone to do their own thing and he kept that promise. But its a new era and regime at BRK and I believe this is a story that will be told over the coming years, a story that the market may already see unfolding.

Some economic indicators are pointing to a nasty recession. Berkshire is the Rock of Gibraltar for weathering a downturn in the market. If you need to be in stock - but want the optionality of cash - there is no better alternative.

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