Munger: “Nobody Knows What’s Going to Happen.” And This Time, Berkshire Is Not Piling into Stocks & Companies

“I don’t think we’ll have a long-lasting Great Depression…. But we may have a different kind of a mess. All this money-printing may start bothering us.”

By Wolf Richter for WOLF STREET.

There is something refreshing during these insane times when a guy in his mid-90s who has seen it all and has been successful at navigating it, and who, during the last Financial Crisis, was buying stocks and entire companies hand over-fist, now says that he has never seen anything like this before, and that he doesn’t know what to do except to sit tight. And they’re not buying the rally, and they weren’t buying the crash.

Charlie Munger, vice chairman of Berkshire Hathaway, was talking with The Wall Street Journal about the current situation and how he and Warren Buffett are looking at it. And they’re not buying.

During the Financial Crisis, they were lending money to Goldman Sachs and GE and getting warrants too that turned out to be very profitable, and they bought stocks, and they bought BNSF outright after the partial stake they’d acquired before the Financial Crisis went sour.

But today’s situation is different.

“Well, I would say basically we’re like the captain of a ship when the worst typhoon that’s ever happened comes,” he told The Wall Street Journal. “We just want to get through the typhoon, and we’d rather come out of it with a whole lot of liquidity. We’re not playing, ‘Oh goody, goody, everything’s going to hell, let’s plunge 100% of the reserves [into buying businesses].’”

“We’re always going to be on the safe side. That doesn’t mean we couldn’t do something pretty aggressive or seize some opportunity. But basically, we will be fairly conservative. And we’ll emerge on the other side very strong.”

And when the Journal asked him if executives of big companies aren’t now approaching Berkshire and asking capital – as they’d done during the Financial Crisis – he said, “No, they aren’t.”

“The typical reaction is that people are frozen,” he said. “Take the airlines. They don’t know what the hell’s doing. They’re all negotiating with the government, but they’re not calling Warren. They’re frozen. They’ve never seen anything like it. Their playbook does not have this as a possibility.”

“And the phone is not ringing off the hook,” he said. “Everybody’s just frozen in the position they’re in.”

“Take the airlines,” he said. OK, let’s.

Airline stocks are revealing how the thinking of Munger and Buffett has changed about this crisis. Back on February 27, Berkshire bought another 976,000 shares of Delta (at about $46 a share), bringing their total stake to nearly 72 million shares, for an 11% stake.

On March 13, as airline stocks were careening lower, Buffett told Yahoo Finance: “I won’t be selling airline stocks.” Which boosted Delta shares to $38 a share for that day.

At the time, according to SEC filings cited by Yahoo Finance, Berkshire held, in addition to the nearly 72 million shares of Delta [DAL], over 53 million shares of Southwest [LUV], 42 million shares of American [AAL], and nearly 22 million shares of United [UAL].

But then all heck continued to break loose, and on April 3, it emerged in an SEC filing that Berkshire had unloaded a chunk of the airlines, selling 13 million shares of Delta and 2.3 million shares of Southwest, bringing in about $389 million in cash. Upon the news, but well after Berkshire had sold, the airlines tanked even more.

Airline stocks have barely ticked up during the historic spike of the broader market. The market-cap-based WOLF STREET Airlines Index, which tracks the seven largest US airlines, shows that together airlines are still near the March low. But it’s not a historic buying opportunity for Berkshire. Munger and Buffett decided to sell on the way down to lower the risk.

In the chart, the fat part at the bottom of the straight line indicates that the dictum on the WOLF STREET beer mugs – “Nothing Goes to Heck in a Straight Line” – after some serious doubts earlier, has once again been vindicated (market cap data via YCharts):

How long will this downturn last? How bad can it get?

“Nobody in America has ever seen anything else like this,” Munger said. “This thing is different. Everybody talks as if they know what’s going to happen, and nobody knows what’s going to happen.”

“Of course, we’re having a recession,” he said. “The only question is how big it’s going to be and how long it’s going to last. I think we do know that this will pass. But how much damage, and how much recession, and how long it will last, nobody knows.”

“I don’t think we’ll have a long-lasting Great Depression,” he said. “I think government will be so active that we won’t have one like that. But we may have a different kind of a mess. All this money-printing may start bothering us.”

“I do think, sooner or later, we’ll have an economy back, which will be a moderate economy. It’s quite possible that never again – not again in a long time – will we have a level of employment again like we just lost. We may never get that back for all practical purposes. I don’t know.”

In terms of Berkshire, he said that there would be damage too.

“This will cause us to shutter some businesses,” he said. “We have a few bad businesses that…we could be tolerant of as members of the family. Somebody else would have already shut them down. We’ve got a few businesses, small ones, we won’t reopen when this is over.”

And in terms of the stock market, he said, “I don’t have the faintest idea whether the stock market is going to go lower than the old lows or whether it’s not.”

Back in late 2008 and 2009, Buffett was out there on TV and in print, trying to calm panicked investors down, telling them that this was a once-in-a lifetime opportunity to buy stocks. In one of those efforts to get people to buy stocks and push the market higher, on October 16, 2008, after Lehman had collapsed, Buffett wrote in an Op-ed in the New York Times: “Be fearful when others are greedy, and be greedy when others are fearful.”

Now, instead of exhorting people to buy stocks, and instead of buying stocks and entire companies, Munger and Buffett sit on a huge pile of cash, and they added to that pile via the sale of airline stocks as they were collapsing, and they don’t know where this is going, and they don’t want to get run over by events, but they do want to come out on the other side of it more or less intact and have lots of liquidity ready in order to buy whatever deals might then be available.

Helicopter Money for Wall Street & the Wealthy: $2.06 Trillion in 5 Weeks. Regular folks, forget it. Read…  Fed Massively Tapered QE-4. Hasn’t Bought Any Junk Bonds, Was Just Jawboning

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  158 comments for “Munger: “Nobody Knows What’s Going to Happen.” And This Time, Berkshire Is Not Piling into Stocks & Companies

  1. SocalJim says:

    All of that deflation imported from China over the last few decades may be reversed at a fairly rapid pace. I smell inflation.

    • andy says:

      You mean like iPhones gonna skyrocket in price, or dress shirts for office? Does it smell like glue or permanent marker or something?

      • Cas127 says:

        Toast.

        • Anthony A. says:

          Yikes! High interest rates coming back!

        • Joe Saba says:

          as companies, clo’s, mbs all get RATED LOWER the price of their bonds continues to crash
          a 2% bond rated AAA crashing to BBB goes to 10%
          or loses 80% value of bond

          be patient and come out other side and we’ll see what happens
          THANK YOU CHARLIE for more good advice
          if you’re one of the highly indebted – oops – don’t slip on ice(berg)

      • polecat says:

        “All this money printing may start bothering us”

        The public mare appears to be ambling straight down the glue-factory chute, right Charles ?
        But that’s ok .. I’m sure you and your’n will have put to use all that freash plebian-rendered hide glue…

      • Caleb says:

        Thrift stores are full of Brooks button downs at $2 a pop.
        What’s an office?

    • timbers says:

      I didn’t know the Federal Reserve of the United States of America was in fact Chinese.

      Good to know.

    • fred says:

      isn’t it more likely to be deflation as a lot of wealth and thus money gets wiped away?
      If i smelled deflation in the air its a great time to be in gov bonds or straight up cash.

      • sierra7 says:

        Fred:
        “isn’t it more likely to be deflation as a lot of wealth and thus money gets wiped away?”
        Bingo!
        At least there are two of us!!

        • Pete Koziar says:

          It’s an interesting game. Money is being destroyed as loans default, but the fed is printing money to replace it. If they can balance it dollar for dollar, then we get neither inflation nor deflation.

          I am, however, concerned that the region of safety here, the balance point, is rather narrow – an error on either side will lead to either runaway inflation or deflation.

      • Weary Patience says:

        Seems like a nasty but short bout of deflation, followed by a nasty and longer bout of inflation (staples, discretionary, commodity) may be likely

        • Asset collapses are not the same thing as deflation (which is actually a good thing, think long distance telephone charges). I have been arguing for several years that the next asset collapse will hit the ultrarich worst (though those with cash will have reason to smile until the inflation hits, which has probably already started, actually). The Fed QE to infinity can ONLY cause inflation, and will not prevent the collapse of some asset classes. Stocks, bonds, real estate and collectibles are all “toast” (as asset classes).

        • sunny129 says:

          WHERE IS THE INFLATION coming FROM?

          ‘Fed QE to infinity can ONLY cause inflation’

          Fed is currently in QE4. Been trying for inflation since ’09!

          Where is the velocity of money from Fed into REAL economy?
          The Banks either redepositing for risk free return or into the Mkts which is diving! Not enough qualified borrowers! The Wages of the bottom 90% are nearly stagnant and noe the unemployment is around 12% inching up towards 20%!?

          DeLeveraging deflation on it’s way, with contraction of multiples in S&P!

          There are both demand CRUSH and supply SHOCK! No velocity of money! First All the record levels of DEBT in every sector has to be paid, written off or disappeared after Bankptcy of the borrower and or the Lender!
          Where is the INFLATION going to come from??

      • tom says:

        Forget the bonds. Straight up virus contaminated US $$.
        These 2 did not get let in on the game. But they sure as sh*t
        understand now its not about a virus or who has the most a*s
        wipe.

    • kam says:

      @SocalJim

      If you buy something that lasts 1/2 as long as American-made then inflation is a rubber band; virtually meaningless.
      I have Milwaukee drills, made in the USA, that are over 10 years old. The Chinese Milwaukees last 6 months to maybe 1 year.
      So, the Chinese price is 10 times what it appears to be.
      Milwaukee, a U.S. made brand up until recent years, made reliable, long-lasting electric tools.
      Then they moved to China. I can attest their Chinese-made tools are 100% crap.
      Another great American brand destroyed with inferior materials in China. Poor quality copper wire, poor Chinese bearings, etc.

      • VintageVNvet says:

        You are SO correct with this comment Kam!!
        As an ”old school” construction guy who came up in 50s and subsequently, from the actual ditches dug by hand in those days for footings and pipes and so forth, to full time office grunt as analyst, estimator, and project manager, I did not own any power tools for first 7 years working full time in the trades, and, like you, bought only the very best I could find after that, Milwaukee being a fave, probably bought at least 50 over the years…
        When my 1/2 VS 1234, or something like, that finally gave up after 25 years, I went to get another, and found a seriously inferior product.
        So, I have kept my original “Sawzall”,, the one with the now forbidden ”suicide” switch, rebuilt a couple of times in years past with NO charge by the factory, (and, even though I still hate to admit it, that sawzall was berry berry badly abused back in those days, but Milwaukee still rebuilt it, gratis…)
        And, just one more confirmation of what you say: We, the wife and I, built a cabin in a far out area of the so called ‘flyover’ region, in 99,, then, years later, put on a major addition; first cabin had ceiling fans made in Memphis,,, addition had same brand name made in China; never any ‘issue’ ( FKA problemo) with first 3,,, never could get the last 3 fans to ”balance,” and had to replace two of them within ONE year, gratis luckliy, due to obvious manufacturing defects that were acknowledged.
        I, for one, would really really think/hope its about damn time to bring back ALL manufacturing to the really skilled/trained, and perhaps most importantly, caring, fully trained folks in USA, and stop the drain to elsewhere of our best workers, white and blue collar.

        • Caleb says:

          “Starting in one year, no tax dollars may be spent on products manufactured outside of the U.S.A., except by special license.”

          There, fixed it for ‘ya.

        • Zantetsu says:

          But there are Chinese made products of good quality (I own many) and there are American made products of bad quality (I’m thinking every American automobile made from 1970 through 1990 as an example).

          I do trust American made over Chinese made and do try to buy American made where possible, but it’s not like every product needs to be made here. Like, Chinese people need to earn living too.

        • 91B20 1stCav (AUS) says:

          Kam/VVNV/Zan-thank all three of you. I have always felt that one of our biggest modern problems is that too much of upper management in manufacturing has never spent a day on the factory floor, let alone remaining with a firm long enough to acquire institutional memory. Wizzes at financial engineering they may be, but all-too-willing to sacrifice previous quality to boost next quarter’s share value. Given that too many world citizens no longer shop quality, but (often by financial necessity) price only, the race to the bottom sucks in even previously trusted players like Milwaukee in order to maintain or expand market share. (Anecdotal aside from a friend in automotive repair-Back in the late ’80’s Nissan couldn’t figure out why they couldn’t make headway in expanding market share. Market research among existing Nissan owners was overwhelmingly positive, primarily because the vehicles were so long-lived. The light came on-to expand market share, more units needed to be sold in a period of time historically occupied by current product. Cheapening the product cost through less engineering/materiel/labor investment was decided as the way forward-a charge that could be leveled equally at Detroit in Zan’s reference).

          May we all find a better day.

        • pogohere says:

          I assume the American company manufacturing in China the tools mentioned specified the quality it wanted.

      • Keith says:

        Maybe of America of old, but if I recall correctly, obsolescence was often built into the cake, at least in the auto industry which gave Japan an opening with their cars.

        While I would like to support Americans over other nations, in the end, you get what you pay for. You buy cheap Chinese products, you get garbage. You pay extra for the higher end, and you get quality, even if made in China. Case in point, I have DeWalt tools, for at least five years, and they have lasted despite taking a beating. They are part of the global chain, made in China, Mexico, etc.

        The main issue is are we willing to spend more to hire an American to make these products or do we want to lower our living standards to compete with the Chi-Coms or Mexican, who make a lot less on an hourly basis.

        • p coyle says:

          if the cost of living went down more than my hourly wage, i would be tempted to take that deal. declining living standards, sans debt, have been baked into the cake for some time already. adapt as you can.

      • intosh says:

        ‘‘Another great American brand destroyed with inferior materials in China.“

        Twisted optic. It should instead read: “Another great American company destroyed their own brand by choosing inferior materials.” Period.

        Milwaukee, like many companies, could have asked their products be made with better materials. But no, greed made it so that they opted for cheaper production costs and pocket the fatter margins. So don’t blame the Chinese.

      • Dave says:

        I’m old enough to remember when “Made in Japan” meant cheap crap. Not any more, and I expect the same outcome for “Made in China”, but probably much sooner.

  2. The two most experienced guys in the game are like “Here there be dragons.” I’m not sure WHY feels reassuring, but… I’m gonna just go with it.

  3. GotCollateral says:

    I don’t know either, but one thing is for sure, until we know, more companies will keep defaulting on their debt because no bank will be willing to roll over the trash on corporates / households books

  4. Shiloh1 says:

    Warren and Charlie always reminded me of the 1980s wine cooler guys.

    When they say they are sitting on “cash”, wonder what they mean, specifically?

    Could never understand airlines play.

    • Wolf Richter says:

      Shiloh1,

      For the big guys, “cash” means Treasury securities with short maturities, corporate paper, and other short-term and liquid asset with minimal credit risk.

      • DaKine says:

        Because there is no such thing as cash! Only higher and lower grades of debt! At least at any size that moves markets. As you know.

        A 6 month treasury is more cash than a bank deposit, and that is why it will trade negative, and that will move out the curve. Just like Europe did earlier from their flawed system; Germany is a true sovereign, Italy was a junk bond.

        Cash (which exists at my scale, USD in particular), treasuries, gold… all forms of savings and liquidity which must be maintained.

    • Suzie Alcatrez says:

      I think Buffet’s strategy was to buy all of the major airlines, thinking it was a zero sum game. If one airline were to become less profitable, then the other airlines would become more profitable. There was absolutely no way for his investment to lose money.

      • No1 says:

        What if they all become less profitable, e.g., oil goes up? I know, there’s no danger of that happening anymore…

      • KPL says:

        “There was absolutely no way for his investment to lose money.”

        till coronavirus did them all in. Reminds me of a Howard mark’s Memo about a one horse race and no sure bet…

    • John Taylor says:

      I remember when Berkshire started picking up the airlines. They wrote that there has been an incredible amount of consolidation, and that certain hubs and routes were dominated almost exclusively by individual airlines. In other words, an oligopoly was forming in US airlines which would help ensure they would make money.

    • rankinfile says:

      Trading Places with Eddie Murphy and Dan Ackroid.

    • c1ue says:

      Berkshire is fundamentally an insurance company.
      They’re uniquely positioned for nCOV because they don’t insure anything affected by nCOV – they primarily deliver super catastrophe reinsurance, which I’m 99% sure doesn’t include nCOV.
      The rest of their business is deploying this cash in a way more profitable than the standard other insurance company practices: Treasuries and bonds.
      Some of these businesses will be hurt badly – fast food retail, auto insurance but overall, Berkshire’s interest in these businesses is long term so it doesn’t matter. Berkshire doesn’t need to quarterly/annual cash generated.
      I’m not surprised they’re not buying – valuations have been so high that they’ve been piling up a lot more cash than usual. The airlines buy was actually a sign of surrender – and the subsequent crash and burn is only going to reinforce Buffet’s and Munger’s views, although officially investment decisions are now made by someone else.

  5. California Bob says:

    “… Berkshire had unloaded a junk of the airlines ….”

    Freudian typo?

  6. Dave says:

    When a guy like Munger talks, one has to take pause and listen. Sometimes, just giving things a little time to perk out may work out best.

    • Tinky says:

      Sure, have a “listen” to Munger after the previous crisis (if I could bold the final sentence, I would):

      “You should thank God for bank bailouts— absolutely required to save your civilization. So I think when you have troubles like that you shouldn’t be bitching about a little bailout. You should have been thinking it should have been bigger. You should thank God the government saved the big banks and their investors.

      Now, if you talk about bailouts for everybody else, there comes a place where if you just start bailing out all the individuals instead of telling them to adapt, the culture dies. Suck it in and cope.”

      Charlie Munger

      • S says:

        That is right. Here is my translation of his words: Reward the speculators and steal from the savers.

        • WES says:

          S:

          Crony Capitalism!

        • p coyle says:

          well, we have seen how that all worked out. what if we try bailing out the individuals instead of the big banks and their investors this time? perhaps these esteemed gentlepersons/corps could try to adapt, to “suck it in and cope” as it were, and set a proper example for us lowly individuals.

      • Portia says:

        “absolutely required to save your civilization.
        …You should thank God the government saved the big banks and their investors.”

        “Civilization” and “investors”
        Those words jump out at me, and why would “the government” not save the investors, since they are big shareholders, and how can they be “civilized” if they have to live in a double-wide? I just read that Madame House Speaker (I am afraid to type name, she has a posse (not here, probably)), appointed Donna Shalala to “oversight”. Shalala owns share ownership in a shitload of companies that will be at the front of the line for a bailout. She holds shares in Boeing, Alaska Airlines and Spirit Aerosystems, which builds a lot of pieces of Boeing aircraft. Chevron, ConocoPhillips, Royal Dutch Shell, and Occidental Petroleum . She owns entertainment stock in Paramount, Live Nation, and AMC Theaters. She owns Choice Hotels; TripAdvisor; Ralph Lauren, L Brands, Burlington Stores, and Five Below; Walmart, OK there. She owns big banks JPMorgan Chase, Wells Fargo, Bank of New York Mellon, BBVA Compass, and HSBC.

        Oversight indeed. Munger understands!

        • Portia says:

          I forgot to mention that Shalala’s list of stock disclosures goes on for over 25 pages–Madame Speaker says she picked her because she is “someone who reflected the beautiful diversity of our caucus.”

        • timbers says:

          Great post, Portia.

          “All is revealed.”

          From a movie entitled “Apocalypse”

        • VintageVNvet says:

          Good to see you back commenting on Wolfstreet Portia.
          I missed your insights, acumen, and general knowledge from which I have learned so much, along with from many of the articles and commentors here.
          Can’t speak for anyone else, but please be clear that I am an old time individual capitalist contractor since 1951, when I first asked dad for money to buy a football, (to replace one looked more like a basketball,) and he said to go earn it, thinking, no doubt that I would be working for him in yard, etc. I started selling newspapers on a corner for 5 cents,, got 2 cents of that, and if I sold all, made 50 cents an afternoon,,, WOOOEEEE, I a rich kid!!
          My goal as of contemplating my naval operations at 3 am this morning is to do my best to do what ”jawboning” I can so every kid/person has that kind of opportunity to hustle, work hard, and make all the money they want legally, etc.
          Long way to go, I certainly know, but this mess may actually help clear away some of the detritus, eh?

        • Portia says:

          VintageVNVet, thank you, you all are very kind here, I must tell you. I have an eerily similar story from childhood where my friend and I wanted a new kickball for neighborhood games. We sold newspapers to get that also, back in the early 60s. It was pretty humiliating at times, because the paper was called “The Free Press” and we went basically to collect donations, whatever they thought it was worth to them, and some people could not resist yanking our chain about the “free” part. But most people were down with our mission, so it was a good experience.

      • KPL says:

        Yeah, he was then called Charlie “suck it up and cope” Munger. Basically these guys are all tarred with the same brush. They will suck up to the Fed’s money tits and have a feast at our expense and we simply need to cope. But then he says as it is…

        • Xabier says:

          Tarred indeed: if only we could feather them as well, and…….. light a match.

        • Mad Puppy says:

          Maybe Mr. Munger feels he will soon have to face his Maker, and has had an epiphany. So, maybe outright greed is no longer at the forefront of his thoughts. This is one bubble I could burst- One year of grace does not wash away 95 years of greed. The Great Reset is upon us, and great fortunes will be lost. I take some comfort in the knowledge that the 1%ers are as uncertain and as concerned about the future as I.

      • Xabier says:

        Hard to find words to express my regard for that level of disinterested, even Olympian, wisdom.

        Wonderful find, that quote!

      • Mike G says:

        He’s a big investor and he’s working his self-interest, which is privilege for big investors. He’s not looking out for you or for the good of the country.

      • cb says:

        From my vantage, both Munger and Buffet talk their book. And bailouts that serve their interests are just fine.

        They own and love wells Fargo and Goldman Suchs. That ought to tell you something about ethics.

  7. Eastwind says:

    Berkshire’s airline stock sales:

    Lots of mention of those sales in various articles, but many authors are focusing on Berkshire only having sold a slice of their airline holdings. If my understanding of the SEC reporting rules is correct, (and I’m no expert) many are making unfounded assumptions.

    The airline stocks the SEC form was filed for were stocks where berkshire owned more than 10% of the company – and thus had a reporting requirement that required report of the sale within a few days.

    The reported sales dropped Berkshire under 10% ownership in those companies. Thus, if my understanding is correct, subsequent sales would be subject to the rules for holdings of less than 10% – or 45 days past the end of the quarter. For March sales that would be May 15, or August 15th or so for shares sold after April 1. *If* I’m correct about the rules.

    So people who assume Berkshire sold a small junk *and no more* because no more sales have been reported may be completely wrong – Berkshire could have completely liquidated its airline holdings on subsequent trading days, and we won’t find out about the rest of the sales until later.

    It’s also possible that Berkshire simply wanted to get under 10%, so sold off the small slice to do that, intending to hold the rest.

    But I think they have to have figured out that the rosy growth predictions the airline CEOs sold them on a year ago are completely bunk, that there is no visibility when the airlines will stop burning cash, and that the greatest value-destroying industry in the history of the country is on track to chew up a few billion more over the next couple years.

    • NewGuy says:

      Hard to believe Berkshire bought more Delta at the end of February. I thought the writing was on the wall for airlines at the end of January when all China flights were cancelled. Crazy times.

  8. DR DOOM says:

    Buffet and Munger knows there is nothing worth buying.They are apex predators that have discovered their prey have been consumed or all skin and bones and no meat. Buying companies and squeezing money out of them does not equal creating wealth. They have been instrumental in the destruction of the middle class.

    • Unamused says:

      Buffet and Munger knows there is nothing worth buying.

      Not at these prices. What exactly would they be buying? The opportunity to lose a lot of money?

      They’re pleading ignorance, but the fact is, they’re scared. They know there hasn’t been any real ‘economic growth’ in years, because it’s been running on debt. It was merely impaired before. Now it’s actually broken.

      They know the financial markets are broken. They do not function rationally and have been running on fraud and fumes for years. They know that consumer markets are broken. Airline customers, real estate customers, they aren’t coming back, because they won’t have the money and there’s nowhere to go.

      They have been instrumental in the destruction of the middle class.

      They know most companies won’t be making any money again, ever. That’s why corporatists grabbed all those trillions in Fed bucks ASAP, while there was still something to grab. There wasn’t much left to squeeze out before. Now there’s nothing, but they’ll keep on squeezing, and that will guarantee the economy will never even have a chance to come back. Their customer base is gone. They’ve moved from hanging on to subsistence.

      Depression? No. More like Greater Depression. And it’s permanent. There is no positive path forward.

      Give it time. You’ll see.

      • Anthony A. says:

        I think you are implying we (the U.S.) is on a path to end up like japan? Correct?

        • Unamused says:

          You should be so lucky. Your question assumes Japan’s economy has been worse off than the US economy, which is not the case.

      • RD Blakeslee says:

        Having lived immediately post 1929 and living through such times I have planned my life to prepare for its possible return.

        One might jump to the conclusion that it’s been an unhappy, deprived life.

        Noting could be farther from the truth.

        • DR DOOM says:

          Every time I hear someone say Or write “Great Depression ” I start to feel guilty . That’s what it is like being raised by a post Depression family in Appalachia. Be thankful for what’s on your plate and here it comes ” neither a lender nor a borrower you be” I can empty a room full of smart phone automaton family members with that expression . They are tired of hearing it and I will keep saying it till I die.Being happy is being alive. Every thing else is cream. And I know how to enjoy cream.

        • Zantetsu says:

          Hi RD Blakeslee, I sometimes give you grief on these forums for your opinions but I have to admit that someone who has lived for so long must have some wisdom so I will pay close attention to you and try to learn what I can. Best wishes.

  9. Jdog says:

    These guys have every incentive to talk the market up as much as they can, and if this is as positive as they can get, that should tell you something….

  10. MCH says:

    I recall that Buffet at one point bought some silver, and it was sitting in a vault somewhere. Not sure if he has kept it, but it’s probably a nice hedge. The oddest thing I saw in the 13F when it came out was that Berkshire bought VOO, which was the Vanguard S&P 500 tracking, now to be sure it was not many shares, certainly, it wasn’t even a rounding error when considering what type of money they have. There was also another one, can’t remember which.

    But either way, it was interesting to see them moving into ETF, first time I ever saw that.

    I wonder if they would’ve bought into gold as a hedge. I doubt it, but one never knows with Buffet.

    I am curious what they’ll shutter, may be a couple of newspapers, may be See’s… who knows.

  11. Raises the question who is buying equities? You have a couple ancient mariners here, and this is a young man’s game. Maybe we are at one of those turning points in history. Nobody knows? I know, I just don’t know if I am right. I am not young, but if I had their money I would turn the financial world on its ear.

    • Lance Manly says:

      Quants, hedge funds and don’t forget the huge contingent of the BTFD folks out there that haven’t lost money in ten years with that strategy. The quants and hedge funds will keep trading until BTFD folks have been sufficiently fleeced.

    • Jdog says:

      You have to remember, most of the guys in charge of funds now have never even seen a real recession, the closest they came was 2008 and all that did was make them believe the Fed could fix anything.
      Most are probably still convinced that this thing is just a buying opportunity. By the time they figure out the Fed can’t fix it, it will be too late.

    • cb says:

      @ Ambrose Bierce – “but if I had their money I would turn the financial world on its ear.”

      and how would you do that?

  12. Frank Miller says:

    The Fed will print. For corporate and economy. Cost is near zero. No choice. Wall street and main street will demand it. Election year.

    • polistra says:

      Main Street will demand it, Wall Street will get it.

      • Frank Miller says:

        Good point. So far true. Was true in 2008 too. You could be right. My outlook was, if they stick with their supply-side and banker support only, in this crisis, then how long can they remain relevant? Mainstreet is already pissed off from 2008. My view was, it’s the Fed vs 150(?)million voters and workers, (less a few billionaires and few million of their broke but otherwise rabid fans), from buying food, medicine, health care, rent, taking care of their kids, and having a roof over their heads. The Fed is extending the crisis too with supply-side support only. You could be right. My bet is they will print; or the government will; or the Fed (Trump too) risks being shoved aside. (In a humanitarian view, they should be too). If politicians and Fed try to hang on, to the banker bailout model, then the irrational blow back is a serious risk; or this is also when one individual can galvanize fundamental change. Will the Fed or Trump risk that?

  13. Michael Gorback says:

    Buffett is a silver fan because it fits his world view. It’s an industrial metal. Gold, as we all know from the WSJ, is just a “pet rock” – a pet rock that has beaten Buffet’s performance for the last 2 decades.

    I’ve heard him argue that if you buy an ounce of gold and hold for years at the end you still just own an ounce of gold. Well, how about a share of Enron or Nieman Marcus? A handful of vapor.

    Gold has no counterparty risk and never gone bankrupt. Would you rather own gold and silver or derivatives?

    Too bad about getting some gold. No physical to be had, just financially jiggered vehicles like GLD.

    “All this money-printing may start bothering us.” – understatement of the century, Charlie.

  14. John Hope says:

    Charlie Munger is spot-on . Nobody knows what’s going to happen . That’s the only serious position to take because it releases us into the now and stop us projecting from the past i.e. priory to the pandemic breaking out.
    I’ve written this up on my blog ‘ A Tale of Two Viruses ‘ the website address is twoviruses.com

  15. Sara Rancano says:

    Do you regret telling your readers in a pod cast, Wolf that 2008 would never happen again, it was a “one off” last year? I don´t think you even saw this coming Wolf. It was pretty obvious.

    What they are saying in effect that the probability of Wall Street inflating the bubble again is pretty low. Airlines can all the subsidies but how many will be flying if & when the economy opens up again? They are going to need even more bail-outs!

    • This crisis is going to turn on the unwind of the GFC whatever the catalyst. Reinflating the bubble has been a global effort. Wolf also went short at the top.

    • DR DOOM says:

      Wolf is no Delphi Oracle. He presents his stuff with qualified facts and with a passion. He loves this shit. The commenters are allowed lots of room to blather or sometimes add to his work product. He will clip you if you are being a dick. OUCH!

    • Wolf Richter says:

      Sara Rancano,

      I rarely get accused of not being sufficiently Doom and Gloom. I guess your comment is like a badge of honor :-]

      However, let’s split some hairs.

      Financial Crisis 1 was caused by the banks that were collapsing after a binge of bad mortgage and consumer lending.

      This crisis is caused by a health crisis (pandemic), where the global procedures to control it have caused a global economic crisis, which is now causing, among other things, Financial Crisis 2.

      And I suspect the outcome will be different too.

      • Briny says:

        Wolf, given the makeup of our economy, I believe it’s going to come down to the behavior of the consumer both during and after this pandemic is over, for whatever definition of over ends up being reality. We saw in the past that events of this type can cause a radical change in behavior, so the question is what will the result look like. My knowledge doesn’t extend into psychology, so no clues here.

        • Wolf Richter says:

          I don’t think we will be the same afterwards. This will change us consumers, workers, and businesses.

        • p coyle says:

          i think public trust in institutions it going to take a hit. i have a few ideas about which ones, but no certainties. the new normal will be, if nothing else, different.

  16. Michael Church says:

    Markets at a critical juncture this week in time and price. We will find out soon whether we have an even larger leg down or the markets go up to complete a double top perversely surfing on the dire short/medium term economic outlook (and of course the tsunami wave of printed money).

    • Kent says:

      “and of course the tsunami wave of printed money”

      I wonder how that tsunami compares to tens of millions of people going from $50,000 per year jobs to a one-time $1200 payout.

      • Anthony A. says:

        In our extended family, a step daughter-in-law just went from a $120K/yr job (oil & gas accountant) to a layoff @$450/week (and maybe some fed dollars on top). Plus, no jobs to be had in that industry for her …..a 55 year old accountant. The $1200 is sorely needed for her, but it’s just her monthly house payment.

        • William says:

          By 55, she’s learned the importance of having multiple income streams and to be prepared for 50+ age discrimination in the job market. I’m surprised the $1,200 is sorely needed if she’s had years of over $100k income to enable her to prepare for hard times.

        • p coyle says:

          well, tell her she could be worse off. her family (assuming she has one) doesn’t sound like they’ve been living in a car or on the streets for the past two years.

          we have, as a society, had ample warnings that we were about to run into the wall. nobody really did anything to hit the brakes. and here we are. empathy has been relegated to a rather threadbare $1200 one time payout. with of course promises of more free money.

          the future is, indeed, as bright as cory heart promised back in the day.

  17. Ensign_Nemo says:

    The problem right now is that everything looks like a bad deal.

    There are some short-term beneficiaries of the virus pandemic, i.e. supermarkets, food processors, mask makers, cleaning supply manufacturers, maybe some medical suppliers and pharmaceutical makers. These are short to medium term investments, however, as once the pandemic fades the panic buying and medical supply shortages will abate.

    After that, there’s nothing left to do, except wait out a long and bleak re-connection of the world of finance with the real world.

    • Unamused says:

      The problem right now is that everything looks like a bad deal.

      That’s because everything is a bad deal.

      Before, the parasite was killing the host. But it was SARS-CoV-2 that finished it off. It’s just going to take a while for the rigor mortis and the putrefaction to set in.

      • p coyle says:

        whatever strange beast that humankind has managed to create, will manage to stumble around, knocking everything off its shelf (and pissing off the hosts as per the usual), until it finally hits it’s head on the floor and knocks itself out for a bit. more often than not, it manages, somehow, to pull its face out of the puddle of dried up blood and get to work the next day. one of these days may just be different.

    • Orrin says:

      Hmmm cash seems like a great deal to me. As waves of insolvency and defaults enter the collective consciousness, that giant sucking sound you hear will be massive liquidation in pursuit of dollars around the world. Just the first pin prick you saw EVERYTHING deflate. Fed will not be able to keep up lol. Politicians are too incompetent to keep up lol. Asset prices will be eviscerated, and I highly doubt any safe haven debt-based instrument (t-bonds) will be spared. There is going to be a pandemic of economic death by suffocation as every entity on earth tries to pay its bills. Dollars are economic oxygen and there won’t be enough. When you need oxygen you could care less about a fancy car, vacation, meal, etc. You can’t ****ing breath and desperation is all that you know. If I had bigger cojones I’d go 100% cash.

      What also seems like a great deal is volatility. Seems highly likely to continue to surge. How to benefit is a trickier question.

      All of this is fantastic long term though. I expect a whole new level of freedom, health, mobility, meaning, connection, and standard of living is in store. But old ways and old institutions are going bye-bye. And the rebirthing process will involve much pain, angst, abuse, and death.

  18. Michael Engel says:

    1) When America open business will be slow.
    2) In the next few months many businesses will die.
    3) Those who survive will do well because the competition
    have died. It pay to gamble and open.
    4) Traffic eventually will come. The last men standing will charge more, until new Mungers will be born.
    5) Macy’s/Bloomie + Saks + Tiff will rule US and NYC.
    6) A hair salon down can lose clippers, few chairs and mirrors.
    7) A $1M to $3M restaurant must open, even if it will be slow,
    waiting for the competition to die. Tomorrow will be much less crowded.
    8) A store owner with $10M is forced to open. What else can he do with his goods. Either turnover, slow first, or the liquidators. Triple key with screaming discounts is better than death.
    9) Marks for labor. Marks overextended ego blinded him. Labor is part of the picture. Business have other costs besides labor : inventory, fix assets, debt and obligation. Marxism is fractal of capitalism.
    10) When business close, labor fall on gov support.
    11) This crisis will lead to either :
    – rejuvenating of industries & businesses, new Mungers, demand for young, new types of employees, out of tech schools, with good hands and brains.
    – gov in charge and stagnation.

  19. Michael Engel says:

    Moderation : Buffett + Munger are 200 years old.
    We are waiting for new Buffetts/ Mungers, because Munger/Buffett were born in 1924, that’s long time ago.

    • Anthony A. says:

      Yeah, but they are here now, and probably neither one of them can’t remember 1924.

  20. kk says:

    As Buffett gets bigger and bigger he ceases to be playing the market and becomes the market. BH may have lots of cash but it also has lots of shares and they have been hammered – selling is a not a sign we can interpret easily as it could be for any reason, buying is the sign to watch. Once the big boys start buying in volume we can know that they have been told by our political masters that all will be made whole.

  21. Michael Engel says:

    1) Kass put a spell on Munger.
    2) Munger bought airlines, but airlines are not flying.
    3) Munger renovated stores, but the Malls are closed.
    4) Labor is not fungible. Labor have nowhere to go.
    5) When Munger start using a walker, energy & utilities will be on furlough.
    6) Everything Munger is going in reverse automatically..
    7) When Munger cough and shiver, the financial sector will freeze as well.
    8) The gov strong hands will acquire Munger banks, rejuvenate them, collect dividends and sell them for higher prices.
    9) Xi Xi China isn’t B&H forever, he is neither a god.

  22. S says:

    Wow, these billionaire guys actually believed the B.S. employment number put out by the federal government before everything went south. It was a lie, just like the CPI number is a lie. If you want to know a more accurate employment number then look at each state’s U6 unemployment number.

  23. Keepcalmeverythingisfine says:

    Munger is talking his book. He and Warren always talk their book. They do throw out a few finance folk tales now and then to get that motherhood and apple pie feeling. Take what he is saying right now with a grain of salt. You will not get rich or even protect your wealth listening to the quips in the media from Warren, Munger, Ackman, Dalio, and the rest. You will also probably not get rich looking at what they did last quarter at a time like this, but you may learn a few things.

    • WES says:

      Keep:

      Don’t kid yourself these two guys know exactly what is happening!

      They didn’t build up cash ahead of this for nothing!

      Likely they are expecting a long grind down before value appears.

  24. Michael Engel says:

    1) B&H $50K in stocks + $10K cash for a total of $60 will not save investors.
    2) The first margin call will feast on the $10K cash, but save the rest.
    3) The rest, what used to be $50K become $35K and investor is out of gunpowder.
    4) When wave II come, the next margin call will force liquidation of shares and $20K $25K stocks saved.
    5) Its a bloody ugly civil war.
    6) You are either loyalist or patriot, but u can’t be both.
    7) If Colonel Lynch will catch u he will hang u on a tree.

  25. Cobalt Programmer says:

    I don’t want to divert the comment section. Crude around $10 is a screaming buy in my opinion. Oil prices are crashing. Is it a good time to invest in oil ETFs? People who can go for five days water only fasting cannot go on without oil.

    • Anthony A. says:

      “Is it a good time to invest in oil ETF’s?” Yeah, a bit safer than buying oil stocks I guess.

    • Keepcalmeverythingisfine says:

      Excellent question. One could buy an oil (commodity) ETF here in bites that allocate the investment over the next few months. I liked the big oil company sector ETF in the low 30’s, but not so much right now in the low 40’s, so waiting for another dip.

      Disclaimer: By doing what I am you could take a serious ass-pounding and lose all your money.

    • Lance Manly says:

      I have been looking at that as well. Sure seems like you would get your money back if you can overlook horrific paper loses in the meantime. I wonder though if oil goes too low it would become somewhat illiquid and cause a run on the fund.

      • Keepcalmeverythingisfine says:

        That would be bad. I swore to never invest in another raw commodity ever again. But damn, $12/brl.

    • A Citizen says:

      The contract you refer to is near month,. expiring tomorrow. June WTI is 22.70 as I write this.

  26. Brant Lee says:

    Berk knows everyone is watching to see what they’ll do. Looks like they are in the position of Too Big To Sell. If these boys start selling off here comes the rest of the market with them. They have no choice but to ride this thing down as slowly as possible.

  27. Pro-Establishment says:

    March 13th says not selling.

    then

    “. . . and on April 3, it emerged in an SEC filing that Berkshire had unloaded a chunk of the airlines. . .”

    This is a perfect example why capital allocation decisions should NEVER be left to private individuals. People might have bought into Buffets selling based on his word, only to realize a huge loss on airline stocks. And think of the employees! Berkshire Hathaway needs to be nationalized immediately . Experience shows that large enterprises are much better run by government officials. USA has a great model for this with Amtrak, the Post Office and NPR, all of which are very popular.

    • Keepcalmeverythingisfine says:

      ooo-boy, here it comes

    • Portia says:

      “Experience shows that large enterprises are much better run by government officials. USA has a great model for this with Amtrak, the Post Office and NPR, all of which are very popular.”

      You’re trolling us, right?

      “Government officials” call who for advice these days? Jamie Dimon, Larry Fink, Jeff Bezos? This must be why the Post Office is getting so much government support these days.

    • Orrin says:

      **Bait detected**

  28. David Hall says:

    Passenger departure volume at San Jose International Airport, California was down 65% YOY in March. Layoffs happened.

    Allegiant Airlines planned on an 80% or more drop in passenger volume. They halted construction on a waterfront hotel/condo resort they were building in SW Florida.

    There is severe deflation in the oil and gas industry.

    Tons of vegetable produce from Florida farms have been dumped or fed to cattle as people shifted their spending habits. People lined up at food banks.

  29. Iamafan says:

    I have a different take on this. Buffett and Munger are old investors who have seen and been through enough. They know the true meaning of a Rainy Day Fund. It’s not there just to buy more of what you like when they’re cheap. It’s there to have cash when your cash flow is impaired and impacted.

    As a stroke survivor, one of the first things I did as soon as my brains and body could handle it was to create a Rainy Day Fund and a separate expense fund for my wife and kids ( one for each of them). They had to be simple and safe enough. So, I created a Vanguard and a Treasury Direct account for each of them. Each month requires them to balance their checking account, either funding them or sweeping the extra balance out to Treasury. This was done with an Expense Account separate from a Rainy Day account that they don’t touch unless there’s an emergency.

    The rate of return does not matter much. What matters is you have money when you need it. Like what can happen now and the months to come. Not many appreciate this old concept because they think someone else can and will bail them out. I don’t believe that for a second.

    Of course they think I’m insane but they’re lucky.

    • Paulo says:

      No, you are not insane….near death or life changing experiences produces wisdom in some individuals.

      The gist I take from this article is staying liquid. This will continue to help Berk drive down prices while they are still telling the truth to readers. Then, these vultures will pounce…and do so quietly. One day folks will notice some of their secret purchases, with this ‘shared secret’ (probably in a WSJ exclusive interview) driving up prices until they quietly sell again, while latecomers are still buying. After all, someone just bought their airline stocks, didn’t they?

      Kind of like Burr and Loeffler and Feinstein selling their stocks, just before the news of Covid 19 broke out.

      Iamafan hit it right. Non-players have to be wise and prudent and stay out of debt. Big players are like a raging forest fire with the ability to create their own weather. I always think of the Dirty Harry quote when my stock buying guru friends think they know what the market is doing? “A man has to know his own limitations”. From what I see the mistake small investors often make is forgetting what those limitations are. They see initial returns and think they are weather-makers. Strokes, cancer, losing a job, struggling to make ends meet are all events that make those limitations perfectly clear for people with their eyes open. It beats skating on thin ice like my investor guru friends recently discovered.

    • VintageVNvet says:

      Very good comment Ima,,,
      In spite of, or perhaps because of folks calling us various similar, we buy as little as possible, save the rest for the last 25 years, and are sleeping well these days, at least up to and until the entire USA guv mint goes to heck, which I really do not think is going to happen, ever.
      Even with very criminal level of interest on savings not being at all attractive, it’s a separate category, yes available for emergency, no not available for SM, more RE we don’t need, etc.
      Your plan sounds really solid!

    • Trent says:

      I came around to your thinking about five years ago. While working at a bank doing wire transfers and finally making enough money to save some each month, it occurred to me i could be fired at any moment because my manager didn’t like me personally. As in he went out of his way to find things i was doing wrong, which he failed at, but i decided this job could go at any moment and i need money for myself. Savings is freedom, debt is slavery. Its as simple as that.

  30. TonTon says:

    It feels like there is a window of time where cash will be good. This is what has always happened throughout history. There is money printing and a deflation but it doesn’t last that long and then there is high inflation. In 18 months to 2 years I don’t think cash is going to be that great. I’m from a western European country (not there right now) and there is a massive amount of cash on deposit in my country. I have a feeling that in a couple of years this cash will rapidly chase assets.

  31. Just Some Random Guy says:

    Oil is down to $11 this morning. And TESLA is up, in an otherwise down day.

    Some days it’s just throwing darts.

  32. Grayce says:

    Financial advisor Bernard Baruch did the same thing in 1928 (or so). He took his clients out of equities after he was in a club and saw other brokers playing poker. He noticed they were reckless and actually taking great gambles. Stocks at that time could be leveraged on the margin in a way that modern hedge fund strategy works. He sensed something was out of whack. His clients survived The Crash.

  33. Dave Mac says:

    I’m bearish oil for most of 2020.

    Then expecting a gradual rise from November onwards.

  34. economicminor says:

    The FED can put as many digits on their balance sheet as they want but they can’t print revenues or profits. The gubbermint can pass out as much currency as they like but they can’t make people go to ball games, concerts or get on airplanes or cruise ships. They can’t even make them go into a crowded restaurant or shopping center.

    The world has been shocked into a new paradigm. The end of these changes are not even in sight yet. No one knows what these changes will usher in.

    There is just absolutely no way that the future will be the same as the past. This is a very unprecedented and emotional time and emotions change people’s perspective. Just ask someone with PTSD or a couple who recently just fell in love.

    Doesn’t mean people won’t gamble on the markets. Most gamblers eventually lose though. Not enough insight to invest. So IMO the best thing to do is just be patient and wait. This to will pass. Minsky was right. Instability will lead to stability which then again leads to new instability. The acknowledgement of RISK is returning to the markets as we watch.

    • Iamafan says:

      RISK is not risk if the Fed has your back.
      Risk is only risk if you have skin in the game.
      If you play with Other People’s Money (OPM) you can be as risky as possible.

      • economicminor says:

        Risk is Unicorns and Zombies.

        Risk is all those collateralized leveraged loans and loans on stock values and ….

        Risk is over capacity

        Risk is Covid19

        Risk exists and when you ignore it or paper over it long enough, it builds into something beyond managing.

        When you have a managed economy, like the USSR had, there comes a time there is no way to fix all the problems created by the central planners who live in ivory towers above the clouds. The Marie Antoinettes just have NO idea what’s going on.

  35. Jdog says:

    I think the big problem going forward is no one can see anywhere to make money. Everything looks like dead money except cash, which will be needed to buy assets at pennies on the dollar.

  36. kleen says:

    Well besides the plans to open the economy back up, there’s no end in sight. It will be a test, to see what happens when people do get back to work.

    It may or may not work out.

    The question is, if it doesn’t work will the panic be worse next time we have to close everything back up?

    How long can the government feed over 100 million of us? Some Americans eat for 3 people.

    If/when restaurants, hotels etc open back up will the crowd show up to spend money? I suspect many people will not. Many will not risk catching this virus until it’s absolutely gone/low risk

    Right now, I wouldn’t eat out even if it’s free. I won’t until the risk is extremely low. I will not get on plane as long there’s an outbreak somewhere in the world. Car travel yes, air travel no.

    No shopping until I see my job is not a risk.

    This will be more complicated than people think.

    1- will people have the money to spend?
    2- will they want to spend it?

    Some people will, but we all know we need everyone back to living normal lives not just some people. Airlines need their flights full.

    The only real solution I see is *if* we figure out that this virus has already spread to most people and they were asymptomatic. Meaning, this virus is not as scary as we thought. That is one scenario I see that would give us the light at the end of the tunnel.

    Let’s say… they start testing everyone for immunity and find out 2/3 of the population already had it and don’t even know it. That would give people confidence that this virus is not as bad as we thought. Or that perhaps it’s mutating to a less aggressive type witch would be great news.

  37. kleen says:

    Airlines will not recover until the reasons people fly, recover.

    Concerts, sports games, casinos, cruises, hotels, weddings, work etc.

    This never happened before where everything was cancelled. Everything shut down.

    Yeah, I agree, no one knows what will happen. Big money will gamble in the stock market, little money lost everything they had in the market and potentially their retirement.

    Big money will need little money people traveling around to bring back those airlines from the brink of bankruptcy. Bailout money will only go so far. We don’t have that much time to resume our spending habits before they need another bailout or go belly up.

    Big money needs us to get back out there, spending. How long can our gov prop everything up?

    • Iamafan says:

      Fear is short term. I’m here outside NYC. My son is in NYC. I had a business in NYC during 9/11. Did it stop us from traveling or going about our daily lives? Nah. This will pass, too.

  38. NewGuy says:

    My beef with airlines is the fact that they are cancelling flights left and right and not refunding money to customers. They keep it and tell you to book another flight in the future. That is BS. When they file for bankruptcy, and they will, do I lose my money ? This $25B bailout needs to have a provision that requires them to refund our money.

    • J says:

      It does… and has been the recent official stance of the DOT before the legislation passed (btw, this is VERY unusual for the DOT to side with we citizens, as opposed to the airlines.) Call NOW, and insist. Settle for nothing less.

      Thankfully… as one of the very, very, very, few provisions of this massive corporate welfare that, in any way whatsoever, is friendly to the citizens of this great country… over the huge corporations.

      (For any hypocrite who may get their hair in a tizzy –ermm, non-covid salon related, that is—, I’m a successful investor…vs the other hypocrites who spew ‘free-markets’ until it requires crooked execs and common holders having to take their own medicine due to their own actions and choices… )

      • J says:

        Oh, and “insist” NICELY, of course. The lower level employee who answers your phone call did not make the policies and is certainly not the decision-maker determining the corporate policy of your refund… yet when we are nice (yet firm to the objective, which is established by outside influences)…

        Oh, and call your momma (to us all), she misses you (us)!

  39. Wes says:

    Both Berkshire Hathaway and Bridgewater Associates have evidently taken some significant losses. Charlie Munger and Ray Dalio have both now admitted that they didn’t know how to “play this one”.

  40. cb says:

    March 13th Buffet says he’s not selling airline stocks. But, then, ” on April 3, it emerged in an SEC filing that Berkshire had unloaded a chunk of the airlines. . .”
    _______________________________________

    It would be interesting to know precisely when Buffet unloaded those airline stocks he said he wasn’t selling. He sure “changed”??? his mind in a hurry.

    • Wolf Richter says:

      I would really like to know the total of airline stocks he actually sold. He only has to disclose sales of positions that are above a certain percent stake (above 10%?). If he owns 3% of an airline and sells all of it, he doesn’t have to disclose it, and we don’t know.

  41. Jeff T says:

    Does anyone know if Buffet sold his diamond and jewelry business? At least oil and airlines people might need. Who needs an expensive rock that is worth less than 90 percent of what you paid for it after your 90 day return period. “Tattoos are forever.”

    • J says:

      I do not know the answer to your first question (officially.) Yet, ahem, I think it is a very good one. Unlikely sold, methinks. Closed? Thinking out loud here, don’t most (all?) of them exist within malls (errm, those properties of interesting current existence)? One point that I will never forget is a close friend of mine, ahem, (accurately) noting how high-quality the diamonds and their settings were that sold at Costco, not to mention their return policy (covering both sides of the trade, it seems… heheh). It changed my way of looking at this industry beginning about two decades ago.

      Btw, mate, I highly recommend that you do not let your “better half” near that second ~question (without the mark, perhaps intuitively…) Ermm, alimony is forev…ok, I don’t know the laws of your particular state…

      • J says:

        Ermm, “shutter” “not re-open”.. ??

      • J says:

        Oh, and with all due respect to Jim, I, in no way whatsoever, meant any disrespect to cost or to him for my ‘both sides of the trade’ comment (since these live long after both of us will be gone, as will the amazing story and history of this amazing company.) I bet he would absolutely know that, and would have definitely laughed wholeheartedly at it in his wonderful roar of laughter, yet for others reading, I’d like to make it clear, as is my respect for him.

        • J says:

          Btw, I greatly express my appreciation to Wolf for allowing all of my posts (in one previous barrage) of my first writings on this site (after having read a great deal of his and commenters’ wonderful insights.)

          In addition, I was recently thinking again about this decision to also sell fantastic quality diamonds and their settings at Costco (beginning def more than 20 years ago, yet my mind’s eye takes me right back to about 2002), coupled with their return policy. Today, I can hardly express how bold, important, and fortuitous of a decision that was (initiated by one of his lieutenants then wholeheartedly embraced and pushed by Jim), which rightfully furthered the framework by which cost was perceived. Actually, having followed the company initially with Price (both publicly traded), my first memory reinforcing this standard was eating and subsequently reading about how much of the world’s market (it was over 90%) of the best pistachios grown/produced went to cost. Seriously, I can still taste them now (no judgment on the current product, although it looks good, I was not a member again for over 15 years, tho I can def attest to the recent line of amazingly good peanuts, cashews**… tho had a shiite batch of almonds as my first return to eating them.. pecans looked good, tho haven’t tried them this millennium… :) ) Plus, meloves how much better they are than TJs’, in addition to how much better their employees (both wonderful) are treated by the company (great TJ employees: please go to cost.)

          If one has not already, one REALLY needs to write a great book about Jim’s/Cost’ first amazing years/decades incl to about mid-2000s (1st installment?)

          **incl imagine the genius about how much more could fit on the same pallet simply by changing the shape of the container (w/same product wt.) The amount floored me (do your own homework ;)) .) Emblematically cost (plus visa move 7 years later: awesome!! -incl fantastic negotiations and execution upon this paradigm!!). I still think about this brilliance ~11 years later… [you did very well, ol jimbo… so many times, so many ways… you’ll be missed ..plus, a whole lot of current businesses sure could learn a lot from you to be applied today…. ]

          Stay safe and well, all!

  42. Cyclops says:

    Governor of Iowa sending 150 National Guards to a massive Hog plant in the state! I guess to quarantine all the immigrants that caught Cov19 there because they Share double or triple bunk beds 24/7 in all the roach motels and inferior housing 20 miles around the plant. Hope, swine flu not lurking around in the premises.

  43. J says:

    So, ol’ righteous Buffett lied? “I won’t be selling airline stocks.” Back in my early days on the street many decades ago, we’d refer to this ‘pump and dump’.

    And Munger as one of the biggest POS’ in the history of finance… At least mafioso bosses don’t act with utter self-righteousness as their capos do nothing but absolutely extort their subjects– hey, as long as they make their tens of billions on the backs of American citizens via their banksters…with utterly rigged deals while trading on non-public information directly from the Secretary of the Treasury and the head of the Federal Reserve. Oh, the great ‘Oracle’.

    If not on his deathbed, I would write more…for now, let me say as one who loves this great country, and who has been quite a successful investor by playing by the real and ethical rules** (think truly greats like Bill Ruane, Peter Lynch, and some of the Oakmark gents, etc., etc.), the citizens of this great country will be so much better off without these two justifying all of the crimes of their…ermm, underlings… and their associates (waives to Goldman!!)

    **ok, I’ll give him the quote, “You won’t meet a lot of traffic taking the high road on Wall Street.” If only the Chair or Vice-Chair had followed that sometime after about 1968-ish, after the dilution/re-org of the partnership. Well, at least the ethics apparently lasted the first ten or fifteen years, too bad not for the last 50++….

    // this is my first post on this blog, after having read a lot, hopefully it doesn’t get censored. Cheers to those who do it honestly!

  44. Willy Winky says:

    Does anyone else come away from reading this article interpreting Munger’s comments as incoherent mumblings of man who trying to spin the end of the world positively?

    He knows and Warren knows — this is a prelude to the collapse of the global economy.

    There is no way out of this. There is no bottom to buy. That’s what Munger is basically saying.

    • Wolf Richter says:

      No, not at all. That’s not what he is saying. Read it again. He is saying that they’ll keep their cash until they decide the time is right, and then they’ll get very aggressive in buying assets.

    • Randombypasser says:

      I disagree, just based on the facts. To get global economy, or actually the current global civilization as we know it, to collapse would require way heavier death toll, more like old school decimation if even that would be enough.

      So no, Munger is just playing his game, to talk, to give some content and insight without giving out too much of his/theirs deep thoughts and intentions. Just normal civilized behavior and normal business behavior, i think.

  45. marc says:

    It’s always interesting to hear what the predators think.
    But for me , when I hear the name Munger, I can barely control my anger.
    It is , after all the guy who , in 2008-9 was drowning in taxpayer bailout money while telling (to their faces) those same taxpayers that they should suffer the downturn and stick it out with bankruptcy and fast food.
    I noticed the guy never missed a meal.
    And is basically a billionaire simply because of his ability to be among the connected who get to steal our money.

  46. Jonathan Steingraber says:

    Im new at this but with all the comments I see here Im guessing the play is to buy sqqq, sdow, and spxs?

    Please help me understand. I sincerely want to know. Im a little confused since I havent seen a comment about betting against the market.

  47. Doug Porter says:

    I don’t think we ever had real capitalism in the western world and G7 Europe Canada Japan UK US.

    Socialism and the devaluation, inflation and basically debt based obsessed economy is a real cancer to our society.

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