[Prudent Capitalist]

Greg Abel would not likely leave in any spinoff, which I doubt would happen. He is designated to become CEO upon Warren's death.

[bar1080]

"if BRK's shares drop after Warren passes, it will be a huge buying opportunity."

I don't think BRK would drop much. Plenty of analysts believe BRK will eventually begin paying dividends like the vast majority of profitable large cap stocks. The original first or second generation gang of friends and family from Omaha in the 1960s -- mostly billionaires now and in no need of dividends -- are mostly gone. Plenty of investors are like me in that they prefer tax managed stocks that favor capital gains and pay low or no dividends.

Dividends are some proof a company is doing well and because paying them regularly is a minor check on management. If BRK plummets on Buffett's death, shares could be propped up by initiating paying dividends or by spinning off assets, perhaps BHE, the energy division with Greg Abel at that helm.

As Buffett has often mentioned, a shareholder can always sell off some of his shares if cash is needed. That gives him, not the company, control of when income is received and taxes are payable.

[Prudent Capitalist]

Ted Weschler and Todd Combs were hand-picked by Warren to fill those shoes and work with the company under him to eventually take over the investments. They both love Omaha and have been immersed in the company. Todd Combs has actually served as CEA of some of BRK's operating companies. They were 2 of the top investment advisors around when Buffet brought them in. Warren has indicated he knows he is in the 4th quarter and will not be around much longer. I like to say I am on the back 9 but am in no hurry to get to the Clubhouse and like to play 14 and 15 over again.

Bottom line, IMO, is that if BRK's share price drops significantly after Warren passes, it will be a huge buying opportunity. The asset base and underlying intrinsic value are there.

[bar1080]

With one "cure" I briefly followed, the "doctor" turned out to be a veterinarian... who specialized in COWs. He made a 7-figure salary. When the stock drops, which usually happens, you see lots of dumb averaging down. And down. and down...

[bar1080]

And old geezer investors think they're doing something to cure disease when they buy those junk shares. Insiders and middle-men are making staggering salaries. Often 7 figures.

I don't tell my kids what stocks to buy but I explained to my one son how the drug testing can go on almost forever. There's always another round of testing.

And the boards are often wall to wall shills

[gfp927z]

Prudent Capitalist, That is amazing, imagine getting A shares for $1700. I remember when the B shares came out, and thinking that Buffett was getting too old, and he didn't like tech stocks, so I didn't invest in the B shares -- big mistake. He did finally take the tech plunge with the concentrated Apple position, which was a key source of gains over the past decade, but overall he's avoiding the Dot Com and Mag 7 crazes and still had phenomenal performance.

Fwiw, I'm still on the fence with Weschler and Combs, although it's still early. They have some gigantic shoes to fill, and it will be a sad day when the Oracle is gone. He's been a continuous presence for so many decades. Buffett gets most of the attention, but Munger was also a vital component to the magic that is Berkshire -

---

[gfp927z]

Bar, Yes, biotech is a sector to avoid for sure. But as a young investor it has all the 'get rich quick' qualities, plus the cutting edge science attraction. But a very dangerous road. Luckily I (almost) never took large positions. One exception was with Dendreon and their early cancer vaccine (Provenge). I made $40 K on that gambit, but managed to lose that plus more on other ill conceived wagers. I actually had some Amgen when it was still a small company. It jumped from 12 to 17 so I gleefully took the profits, but decades later I figured out that tiny investment would be worth several hundred thousands $ today.

Anyway, that was the school of hard knocks, although I still follow the sector loosely out of general interest. But the moral of the story for young investors is to just dollar cost average into the S+P 500 every month. Let it ride, and when retirement time comes you will be fine. Maybe own some individual conservative stocks with 1/4 of the total stock allocation, but put the rest in a broad index and let time do its magic.



---

[Prudent Capitalist]

I was talking on the phone to a client the day after the 87' crash and he mentioned he had just bought a share or 2 of Berkshire Hathaway for $1,700 per share. Yes, that is what a share was trading for the following morning after Black Monday. And, the B shares were not around then. You could buy 1 A share for $1,700 back then and those A shares are $705,815 right now here today.

[bar1080]

LOLOL! "only stock I owned at the time (a doggy biotech)"

I still have never owned a biotech. I consider most of them to be obvious scams, with even scammier management.

[bar1080]

GFP, what a treat to again hear the supremely polished and urbane Louis Rukeyser compared to the raspy Jim Cramer.

1987 was another time buying and holding an index fund would have worked brilliantly had they been popularized yet. Some time around then I began hearing John Bogle talking about his new creation, the index fund. I tracked a paper index fund for quite some time before I tip toed into investing in one, the Vanguard Total Stock Market Index fund, symbol now VTI/VTSAX.

Within two or three years my stocks were outperforming 80% of investors, every quarter and outperforming perhaps 95% of investors over longer periods.

[gfp927z]

Bar, >> Oct 1987 <<

That was a wild few days, but as you said, it stabilized and quickly bounced back. I remember on the Friday night 'Wall Street Week' program, guest Marty Zweig said he thought a crash was imminent, and sure enough it happened on Monday. That was a wild / crazy period, but the only stock I owned at the time (a doggy biotech) actually went up that Monday. But not much of a victory since it had already been pummeled severely a few months before, lol.

Btw, here's that Wall Street Week episode, with Zweig's comment at 6:50 -

---

[bar1080]

Once you have some money investing becomes vastly_easier. Munger talked about that often, the importance of getting your first $100,000. I love watching local penny addicts make the same mistakes over and over and over. They trade far too much, always chasing fads whether it be MJ or electric vehicles or whatever is hot at the moment (AI?). Always trying to hit home runs. where putting together bunt singles will eventually make most people wealthy. I'm always puzzled by why many IHUBers don't seem to improve even over many years. Buffett reads constantly and he had professor Ben Graham, a genius, as a guide. He also had his father, a broker, to steady his hand.

I've never met anyone who was born a great investor. The best ones had mentors who helped. Buffett and Munger flailed around at first but "the boys" lucked into Geico and the insurance business and they made very few dumb errors except at the very start. They tried everything, but they had the ability to learn and improve. Plus Buffett read constantly.

Ihubbers are the dumbest people on the planet, and many are gambling addicts whether they know it or not. What a lethal combination! They don't read... anything about stocks! I used to recommend articles on the DD board but no one read them, even when the author was highly respected and successful.

[bar1080]

GFP, Thanks for that list of bear markets. I remember the early ones because I was starting off so even small, brief drawdowns were painful to me. But back then I had money in real estate, bonds and bank CDs. Stocks weren't all that important to me. I was single and had a secure job. I've always been well diversified, especially by the IHUB standards of slobbering penny gamblers.

I certainly remember the 2007 event with its Depression-like 57% fall. I recall Buffett coming on primetime TV urging people to stick with their stocks which I did. Above all I think I remember every minute of the excruciating but brief October 19 1987 when the Black Monday collapse when the Dow sold off 22% in a single day. I went out and bought a small TV to take into my office to see what the next few days would bring. If we were going into a real depression I sure wanted to watch it unfold.

Anyway, the market began recovering almost immediately.

[Prudent Capitalist]

Don't look back bar. You have had many home runs in investing, and we all have those that got away and ran without us. But spot on with the lesson. very Warren-esque

[Prudent Capitalist]

Art Cashin was a giant. an institution at the NYSE and on CNBC.

[gfp927z]

Bar, >> neither has ever suffered thru a bear market <<

We've had numerous bear markets (below), though the one in 2020 was very brief. The 2022 bear wasn't pleasant, but was predictable due to the Fed tightening. Also, during the 12 year period from 2000 - 2012 the S+P 500 essentially went nowhere, due to the Dot Com crash and then the 2008 crash. So not a great time to be LT buy / hold, but if you stuck with it everything finally recovered.

A logical approach for the very long term would be to hold the broad stock index and then don't follow it. Don't have stocks as a main hobby, and hardly follow them at all, check your brokerage account value maybe once or twice a year. That's what my dad did (he was an aero engineer like your son). He just wasn't interested in stocks, and his investments did great. But when stocks become a key hobby / interest, that's when the trouble starts, lol.


S&P 500 Bear Markets

August 1956
-21.6%

December 1961
-28%

February 1966
-22.2%

November 1968
-36.1%

January 1973
-48.2%

November 1980
-27.1%

August 1987
-33.5%

July 1990
-19.9%

March 2000
-49.1%

October 2007
-56.8%

February 2020
-33.9%

January 2022
-25%



https://www.investopedia.com/a-history-of-bear-markets-4582652


---

[bar1080]

This is kinda amazing. I have two sons; one is an engineer for a large aircraft company, the other is a CPA for a Big Four accounting firm. I don't believe either has ever sold a single share of stock! Both kids were given S&P 500 index funds right after they were born and both have small amounts of blue chip stock and funds they've bought themselves. Both have also owned the red hot QQQ for years. So they've done VERY, well as you can imagine.

Have you ever heard of someone who has never sold even one share of stock? They are the exact opposite of you but I'm not sure that's ideal. LOLOL!

I'm a buy and hold guy, but my kids have taken that to the extreme. Of course, neither has ever suffered thru a bear market which makes holding a lot easier. Neither has kids.

[gfp927z]

Bar, >> sell them the moment a cloud appears <<

Yes, I have trouble holding after the profits have built up, and am compelled to grab the gains before they evaporate. With the choppy market, this has actually worked well in recent years, but is obviously not the ideal. What makes this active approach workable is that I still have some carry forward losses from the 'bad old days', so there are no cap gains taxes on the stock sales. But once those losses are gone it will be a different ballgame. I should have used your LT buy / hold approach from the beginning, but unfortunately in the early years got side tracked by the lure of fast riches.

That said, while holding on to an individual large cap stock forever may be the ideal, even Buffett can change ships relatively often when he thinks his analysis was wrong, or when situations change, etc. And even the S+P 500 has approx 30% in the Mag 7 bubble stocks, so finding a relatively 'safe' place in the stock market isn't easy. Even utilities have become hot potatoes in recent years, with the nuclear and AI power aspects bringing a casino like atmosphere to the sector.

Buffet and Peter Lynch both said that if the prospects of a 20% or 30% plunge would keep you up at night, you shouldn't be in stocks. Fwiw, my own max stock allocation is down to 15%, and I still worry, and have moved a lot into a 3 year Treasury ladder. Buffett himself reportedly has more in cash / T-bills than in stocks right now, so I assume he is also worried, but in a specific way, about valuations, etc. In contrast I'm just a nervous nellie in general, lol.




---

[bar1080]

LOL: "I also wonder why Ajit Jain has sold over half his stake in Berkshire? Seems ominous to me, but then I tend to worry about everything lol."

At least you understand yourself. You generally buy good, solid stocks and then you sell them the moment a cloud appears. BTW, notice how that crappy Else Baby food stock is disintegrating. I pegged that stock as rubbish on first glance a few years ago.

[bar1080]

About 50 years ago, when I was very young and in college, I was uniquely positioned to buy CAT shares. An economics professor I had was also on Caterpillar's board (or some kind of major consultant for them) and thought well of the company. Anyway I decided instead, for some reason, to buy shares in Allis Chalmers, not CAT.

Lesson learned: Own the #1 company in a sector, not the #3 or #4. Allis Chalmers shut down in 1999. I had sold it long before that with a moderate loss. .

[BullNBear52]

Art Cashin was truly a genius when it came to understanding the market. By the age of 23 he had become a member of the NYSE. A class act that will be sorely missed.
https://www.cnbc.com/2024/12/02/art-cashin-new-york-stock-exchange-fixture-for-decades-dies-at-age-83.html

Art Cashin, New York Stock Exchange fixture for decades, dies at age 83
Published Mon, Dec 2 20243:40 PM ESTUpdated Mon, Dec 2 20245:11 PM EST

Key Points
Art Cashin was UBS’ director of floor operations at the New York Stock Exchange and a man The Washington Post called “Wall Street’s version of Walter Cronkite.”
In the intensely competitive and often vicious world of stock market commentary, Cashin was that rarest of creatures: a man respected by all, bulls and bears, liberals and conservatives alike.

[gfp927z]

Bar, Yes, Deere is a high quality company. It does have a substantial amount of debt though, ~ 66 bil, so approx half of its market cap. The stock has been basically flat for the last 3-4 years, but recently broke out so could be ready to resume its long tem uptrend. Caterpillar is another nice one in the heavy machinery area. They have considerably less debt (38 bil), which is only 20% of the market cap. That's the one I owned, but with Deere's breakout it could be ready to play catch up. Reportedly there was a big surge in agro equipment sales back in 2022, but a relative dearth since then. But DE might be a good contrarian value play. I noticed that Buffett doesn't seem to mind companies with higher debt levels, so Deere might potentially become a new Berkshire holding again at some point (?)


>>> Deere Shares Surge on Optimism Farm Gloom Will Lift in 2025 <<<


https://investorshub.advfn.com/boards/read_msg.aspx?message_id=175423561




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[BullNBear52]

CAT and DE were obvious buys after the infrastructure bill passed under Biden. Both have performed extremely well for me.

[Prudent Capitalist]

Yes. Howard used to be an elected official in Omaha (Douglas County Commissioner) but then moved east into Illinois and has also been involved with ADM over the years. John Deere (DE) has done very well as has Caterpillar (CAT). I have held CAT for many years and the position has grown considerably through automatic reinvestment of all dividends. CAT's share price has more than tripled over the past 10 years not counting the dividends, and I suspect DE has done just as well.

[bar1080]

BTW, one new holding for me that's doing great is John Deere. It's risen nicely, plus I 've had several dividend increases. As I recall BRK owned some DE a few years ago and his son Howard was on the DE board at one time. Howard is the Buffett son who is a farmer in central Illinois.

[gfp927z]

Yes, valuations are high. Here's the 5 year history for share buybacks -

(figures rounded to 1 decimal place) -


Dec 2019 --- $ 2.0 bil
_________________
Mar 2020 --- $ 1.7 bil
June 2020 -- $ 5.0 bil
Sept 2020 -- $ 9.0 bil
Dec 2020 --- $ 9.0 bil
_________________
Mar 2021 --- $ 6.6 bil
June 2021 -- $ 6.0 bil
Sept 2021 -- $ 7.6 bil
Dec 2021 --- $ 6.9 bil
_________________
Mar 2022 --- $ 3.2 bil
June 2022 -- $ 1.0 bil
Sept 2022 -- $ 1.1 bil
Dec 2022 --- $ 2.6 bil
_________________
Mar 2023 --- $ 4.5 bil
June 2023 -- $ 1.4 bil
Sept 2023 -- $ 1.1 bil
Dec 2023 --- $ 2.2 bil
_________________
Mar 2024 --- $ 2.6 bil
June 2024 -- $ 0.4 bil
Sept 2024 -- zero
Dec 2024 --- ?
_________________


https://ycharts.com/companies/BRK.A/stock_buyback



---

[Prudent Capitalist]

gfp: Given the significant appreciation in BRK's share price and with it recently trading near all-time highs, it is not at all surprising that the buybacks of BRK shares have ceased.

[gfp927z]

Bar, As I understand it, OXY is especially sensitive to the oil price, compared to other companies. I don't follow the sector too closely, but lots of countervailing factors go into the oil / gas price at any given time. Right now there's the economic slowdown in China, war related disruptions, OPEC members cheating, oil / gas coming back into favor with Trump, which increases demand, while 'drill baby drill' boosts supply, etc.

But another key aspect with OXY is it's leadership in 'carbon capture', which could eventually generate more revenue for OXY than it's oil / gas business. But with Trump / Reps in, carbon capture and climate change in general should be a much lower priority, at least for a period of years. We'll see what happens. Imo, 'carbon capture' is the most ridiculous concept ever, and anthropogenic climate change is being pushed for reasons unrelated to climate. But business is business, and if carbon capture and carbon credits are the future, Buffett's big OXY bet should pay off.

But either way, OXY will benefit from oil / gas retaining a more dominant role in energy, thanks to Trump. There's also another aspect to carbon capture related technology, since injecting CO2 into older gas reserves can boost their output (link below). So a plus to have OXY as the leader in this technology -


>>> CO2 enhanced gas recovery and sequestration in depleted gas reservoirs: A review <<<


https://www.sciencedirect.com/science/article/pii/S0920410520307518




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[bar1080]

A very solid post. I own no Oil/gas stocks as you know. Considered buying OXY when he bought in to it. But didn't because I figured BRK's big OXY/CVX holding was enough,,, which was correct. I see that OXY is off 15% YTD. CVX was even worse.

[gfp927z]

Bar, Looking at the Japanese conglomerates, they've had pullbacks from their highs earlier in the year of between 15-35% (approx). The broader Japan ETF (EWJ) is only down ~4%, but over the past five years most of the 'Buffett 5' have blown away the broader Japan index by a wide margin. Not sure if Buffett has been buying more at these levels, but growing concerns over China may have him reluctant to add more exposure to Asia right now (?)

As we know, Buffett has been hoarding cash in a major way, with 8 consecutive quarters of net stock selling. The Chubb move has been doing great, OXY not so well but it's still early. But overall Buffett's been net selling and not reinvesting much back into stocks, or even purchasing Berkshire stock. I also wonder why Ajit Jain has sold over half his stake in Berkshire? Seems ominous to me, but then I tend to worry about everything lol.



---

[bar1080]

GFP, have you continued following Buffett's five Japanese trading houses? They were doing great for awhile but I haven't checked lately.

Have time to kill. Where I am it's bitter cold with a dusting of snow.

[BullNBear52]

Posted by Bar on another board.
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=175438625

[bar1080]

Thanks DG.

[DiscoverGold]

Here's the full letter Warren Buffett sent out to Berkshire Hathaway shareholders
By: Evan | November 25, 2024

• Here's the full letter Warren Buffett sent out to Berkshire Hathaway shareholders.






Read Full Story »»»

DiscoverGold

[bar1080]

You've probably seen my bio by now. I'm a retired lawyer and business owner. Have two sons; one's a CPA, the other is with Boeing. I never mess with the usual IHUB rubbish stocks. Don't daytrade. Bought my first stock at age 19; read my first book on investing around the same time, many decades ago.

https://investorshub.advfn.com/boards/profilea.aspx?user=42712