The stock market is at its most expensive on a forward p/e basis. There is nothing about this supposed recession that has made stocks cheap for a firm like Berkshire to scoop up.
Charlie Munger: ‘The Phone Is Not Ringing Off the Hook’
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Re: Charlie Munger: ‘The Phone Is Not Ringing Off the Hook’
#42Value investing has been replaced by government support. Big companies like airlines are not allowed to "get cheap" anymore. From Berkshire Hathaway alone, there are hundreds of billions of dollars of private money waiting to step in during times like these. Instead, we will "bail out" aggressively managed companies and encourage all big companies to be more aggressive going forwards. Because they have a government b…
A counterpoint and a reason for hope:
After the 08 crisis, the big banks were required to keep aside a lot more money in reserves, agree to periodic stress tests by regulators, and forgo certain risky activities(proprietary trading).
Now regulators/management are pretty confident that the banking sector is robust and a 08 like crisis cannot happen again.
Re: Charlie Munger: ‘The Phone Is Not Ringing Off the Hook’
#43Earlier quoted context omitted.
> we take this opportunity to acknowledge that Keynes was right, and we don't have to work as much as we do. That isn't what Kenyes said. He said that in a recession/depression the government should spend more than it takes in, and the rest of the time it should spend less. So, if that equates to working less during a recession, we're going to have to work more during the good times. But as for working less in genera…
You're right about Keynes' general approach to handling a recession or depression, but OP is referring to Keynes' theory that people would be working only 15 hours a week by now: https://www.npr.org/2015/08/13/432122637/keynes-predicted-we...
Keybes's mistake is ignoring that people have personal interest in acquiring more wealth, and businesses prefer the efficiency of fewer longer-hour workers in the absence of regulatory distortions like "health benefits required only if working 30+ hrs per week)
Re: Charlie Munger: ‘The Phone Is Not Ringing Off the Hook’
#44Earlier quoted context omitted.
> we take this opportunity to acknowledge that Keynes was right, and we don't have to work as much as we do. That isn't what Kenyes said. He said that in a recession/depression the government should spend more than it takes in, and the rest of the time it should spend less. So, if that equates to working less during a recession, we're going to have to work more during the good times. But as for working less in genera…
You're right about Keynes' general approach to handling a recession or depression, but OP is referring to Keynes' theory that people would be working only 15 hours a week by now: https://www.npr.org/2015/08/13/432122637/keynes-predicted-we...
Ah. Then Keynes did say that, and I was in error. But my criticism of the idea still stands, even if Keynes said it.
The question becomes, do we really want to have all this stuff? Then we have to work hard enough to produce all this stuff. Or, do we want to not work so hard? Then we're going to have less stuff to enjoy with our free time.
Re: Charlie Munger: ‘The Phone Is Not Ringing Off the Hook’
#45https://archive.is/eAFo7
curious FF / Safari through up security warnings for archive.is and archive.today. going at them from a roundabout way gives me a CloudFlare DNS error page. this's been going on the last week or so. wonder what the problem is?
Don't know about the FF thing but here's the CloudFlare thing straight from their CEO--
Re: Charlie Munger: ‘The Phone Is Not Ringing Off the Hook’
#46This quote from Munger is what I find most interesting: > 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. There are roughly 2 ways this could go if what he says actually happens. One is…
Speculating on the future is difficult. However, I disagree with Munger on this point if we're to start manufacturing in the United States once again, we're going to have to retool our economy and retrain people who were in the services industry to work in an industrial capacity. That's going to take some time, and surely American-based firms will take advantage of automation, but there's still a substantial amount of manual labor in factories.
Re: Charlie Munger: ‘The Phone Is Not Ringing Off the Hook’
#47This quote from Munger is what I find most interesting: > 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. There are roughly 2 ways this could go if what he says actually happens. One is…
Among the many problems with that idea is that no one agrees on the definition of a "fairly basic life." One leader's definition will be different from another, so we're ever at the mercy of gaining/losing benefits at the whim of (at least in the US) a distant and isolated ruling class.
US can have state and local welfare systems, so not necessarily distant and isolated.
Re: Charlie Munger: ‘The Phone Is Not Ringing Off the Hook’
#48Re: Charlie Munger: ‘The Phone Is Not Ringing Off the Hook’
#49Earlier quoted context omitted.
The USA is a single country with what's effectively two demographics, and one-and-a-half breeds of politician. "50 countries with different demographics geography culture and needs!" is a complete fabrication. Wyoming doesn't even have a million people in it; implying Wyoming is a country is like implying a go-kart is a jet.
I don’t think culture is population dependent. Baltimore and Wyoming have roughly the same population but very different cultural attitudes, beliefs, ways of life etc. Its hard to make a case they should have the same policies and expect the same results
It's not so much population per se as the urban/rural divide. Baltimore is a city (arguably a megalopolis of Baltimore + Washington DC + Northern Virginia and nearby areas of Maryland). Wyoming, OTOH, is the 10th largest state geographically, the least populous, and literally has more cows than people [0, 1]. If I had to guess, I would say there probably hasn't been a significant number of cows in Baltimore in over 200 years.
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Re: Charlie Munger: ‘The Phone Is Not Ringing Off the Hook’
#50This quote from Munger is what I find most interesting: > 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. There are roughly 2 ways this could go if what he says actually happens. One is…
> we take this opportunity to acknowledge that Keynes was right, and we don't have to work as much as we do. That isn't what Kenyes said. He said that in a recession/depression the government should spend more than it takes in, and the rest of the time it should spend less. So, if that equates to working less during a recession, we're going to have to work more during the good times. But as for working less in genera…
Keynes wrote a lot of things about economics, not just about government spending. Keynes also wrote about a possible 15 hour work week.
From http://www.econ.yale.edu/smith/econ116a/keynes1.pdf
“... What can we reasonably expect the level of our economic life to be a hundred years hence? What are the economic possibilities for our grandchildren?
...
All this means in the long run that mankind is solving its economic problem. I would predict that the standard of life in progressive countries one hundred years hence will be between four and eight times as high as it is to-day. There would be nothing surprising in this even in the light of our present knowledge. It would not be foolish to contemplate the possibility of afar greater progress still.
...
For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented. We shall do more things for ourselves than is usual with the rich to-day, only too glad to have small duties and tasks and routines. But beyond this, we shall endeavour to spread the bread thin on the butter-to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us!
...
Of course there will still be many people with intense, unsatisfied purposiveness who will blindly pursue wealth-unless they can find some plausible substitute. But the rest of us will no longer be under any obligation to applaud and encourage them. “