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Warren Buffett’s Berkshire dumps most of Goldman Sachs stake

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Re: Warren Buffett’s Berkshire dumps most of Goldman Sachs stake

#41

Post by gruez »

dilandau wrote: post #18

Many in finance think we're headed for deflation. If that's the case, dumping equities for cash is a sensible move. He may be expecting chaos in the banking sector as bankruptcies roll in, and these mortgage fund fraud allegations gain traction. It's going to be a wild decade. Watch the government use this to vastly expand surveillance powers, too. Not going to be good for the average American.

>Many in finance think we're headed for deflation

Is that really a problem, considering it can be combated with money printing?

Re: Warren Buffett’s Berkshire dumps most of Goldman Sachs stake

#42

Post by magicsmoke »

dilandau wrote: post #18

Many in finance think we're headed for deflation. If that's the case, dumping equities for cash is a sensible move. He may be expecting chaos in the banking sector as bankruptcies roll in, and these mortgage fund fraud allegations gain traction. It's going to be a wild decade. Watch the government use this to vastly expand surveillance powers, too. Not going to be good for the average American.

Isn't the Fed supposed to print as much money as necessary to ensure positive inflation?

Re: Warren Buffett’s Berkshire dumps most of Goldman Sachs stake

#43

Post by tc313 »

blackrock wrote: post #21
mam2 wrote: post #17

Earlier quoted context omitted.

He was not so wise on the airlines...

The $5 billion loss is likely pocket change to him. But he might be onto something. Which means, does he know some insider knowledge that we don’t? The airlines industry is practically about tourism. Yes, there is business travel, but tourism is an important part of it. But, there is unlikely to be any significant tourism in the years ahead, until some kind of vaccine comes out. So, does he know about some insider kn…

I doubt that he has any special knowledge that provides an edge; nobody knows what the fallout will be from all of this or when/if a vaccine will be developed.

More likely, he’s just thinking about the same facts differently than others. Buffett tends to be quite cautious with regards to potential catastrophic failures, so he’s probably more focused on all of the ways that airlines, banks, etc. might lose a ton of money rather than worrying about missing out on the recovery.

Re: Warren Buffett’s Berkshire dumps most of Goldman Sachs stake

#44

Post by mxschumacher »

Scoundreller wrote: post #40
mxschumacher wrote: post #31

Earlier quoted context omitted.

I believe you would do well in studying the details of the deals you have mentioned before concluding they are failures. Berkshire financed Occidental Petroleum's acquisition of Anadarco by giving $10 bn in cash. In return, BRK received: - $10bn wort of perpetual cumulative preferred shares with a coupon of 8% (e.g. $800m a year). OXY can choose to pay in common shares instead of cash, but in this case Berkshire will…

Ya, IMO, when he beats the market, it's his access to deals that the public can't get and then stamping your celebrity endorsement on it. Maybe in the past there was lots of deep-value out there, but now we have analysts working every strategy. Or squeeze a percent or two of efficiency by taking companies private under 1 umbrella. On average it works out, but it doesn't take many mistakes to sour it.

When Buffett cut cheques to Goldman, GE and Bank of America in the financial crisis of 2009/2010 there were not many other players willing or able to invest billions of dollars. Berkshire might have the most solid balance sheet in the world - they are strong when others are losing their shirt.

The source of Berkshire's strong performance was a combination of very good investments (buying American express in 1964) and insurance float, a great credit facility with negative interest rates.

Given the size of the private businesses Berkshire owns, it is quite naive to assess the firm purely on stock-picking performance of Buffett. The operating results really matter, producing $25bn+ of operating profits per year isn't too shabby.

Re: Warren Buffett’s Berkshire dumps most of Goldman Sachs stake

#45

Post by tankenmate »

mxschumacher wrote: post #33
blackrock wrote: post #27

Earlier quoted context omitted.

Depressed travelling has some interesting plays here. This means that AirBnB is dead. And all those people that bought multiple houses, with multiple mortgages, which they can no longer service, are going to go bankrupt. Good riddance. You can’t short AirBnB, but what other companies can you short? The loan processing companies? Zillow? BofA?

that the tourist sector is in trouble isn't exactly a secret at this point, so additional shorts seem risky. Avis Budget, a car rental company, does 2/3 of their rentals at airports and they carry a huge amount of debt. The car rental space is extremely competitive as it is and new ride sharing offers don't make things easier. Hertz is already very close to bankruptcy

And completing the circle Warren Buffet has a relatively famous saying, "After all, you only find out who is swimming naked when the tide goes out."[0]

[0] Berkshire Hathaway Chairman's Letter (2001)

Re: Warren Buffett’s Berkshire dumps most of Goldman Sachs stake

#46

Post by ineedasername »

rmrfstar wrote: post #5
cowsandmilk wrote: post #4

Earlier quoted context omitted.

Not sure why 1998 is relevant to a stake Berkshire bought in 2008.

Because GS has never been about having a "brain trust". It is about proximity to power. That peaked in 1998 when Time magazine ran the "Committee to Save the World" cover, featuring Bob Rubin, Larry Summers, and Alan Greenspan. To this day, people talk about that cover.

Maybe the big names at Goldman aren't as big as they had been in 1998, but it's all still just a collection collection of social connections and who knows who and inroads into various power structures. And that's not just Goldman, that's banking and finance at a high level writ large.

Re: Warren Buffett’s Berkshire dumps most of Goldman Sachs stake

#47

Post by rcpt »

mxschumacher wrote: post #34
mam2 wrote: post #17

Earlier quoted context omitted.

He was not so wise on the airlines...

because he didn't predict a global pandemic and a government ban on flying? Selling at a loss is hard, Kudos to Berkshire for understanding that the world has changed and acting accordingly, most investors are going to try to sit this out and might well lose everything in the process.

Why couldn't he predict it in February?

Re: Warren Buffett’s Berkshire dumps most of Goldman Sachs stake

#49

Post by koheripbal »

phyalow wrote: post #14
jmeister wrote: post #9

Earlier quoted context omitted.

This is nonsense. GS has always had among the best talent on Wall St. In modeling and software they’ve been a step ahead of everyone else. An extreme example: Fisher Black, a Nobel winning economist, used to work there in the early 90s. And talent is not even the most distinguishing factor: it’s culture. Their culture is held to be the gold standard in corporate America, if you step outside the FANG bubble.

Cant say I agree. I worked for various European and US IB's pre 08, then have for the better part of the last decade been a client of them. IMO GS's culture has always struck me as a lot of self anointed hubris and resembles attitudes found on /r/iamverysmart, which when viewed from the outside it makes one laugh. All US IB's these days are largely just commodity balance sheets. None of them have any tangible edge ov…

...and yet it was always extremely difficult to get a job there, and they paid the best. ...that's literally how you attract the best talent.

...so you, they were arrogant. Maybe some portion of that was earned?

Re: Warren Buffett’s Berkshire dumps most of Goldman Sachs stake

#50

Post by lumost »

lefstathiou wrote: post #39
logicchains wrote: post #6

Earlier quoted context omitted.

>Time to start anti-trust breaking up the 'too big to fail' banks, they are a national security issue and ultimately a bad actor in fair markets. More like time to stop propping them up. If the government hadn't stepped in to save them during the last crisis, a bunch of those banks would have gone the way of Lehman Brothers.

I think the parent post is recommending an orderly breakup as opposed to a collapse where society is left to pick up the pieces. The issue comes back to foreign competition. As much as Glass-Steagall made sense to some, it was repealed because US banks faced increasing competition from European banks that were able to bundle advisory with retail bank deposits. Unless everyone takes similar position globally (or we bl…

Banking is a sector where it's easy to win on a short term (10year) horizon and lose everything on a 20 year horizon. Ultimately if the taxpayer is going to foot the bill on the 20 year horizon then they should be able to ensure that only players obeying the guardrails are allowed to play.
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