Figure 1: Berkshire Hathaway cash and equivalents
The Berkshire Hathaway 2023 annual report’s chairman’s letter by Warren Buffett included a page with the above heading. The ensuing five paragraphs are excerpted from that letter.
Continue reading “Cash as Trash—or King”In 1889, Andrew Carnegie penned an essay that would come to be known as “The Gospel of Wealth.” This seminal work offers a powerful argument for philanthropy, stressing that the affluent bear a moral obligation to use their wealth for the greater good. Carnegie’s message transcends time, urging us to consider the joy and responsibility that come with giving, a notion that is deeply relevant today. This sentiment is beautifully echoed in Khalil Gibran’s The Prophet (1923), particularly in the chapter on giving, which adds a poetic dimension to Carnegie’s pragmatic vision.
Continue reading “Reflection on Joy of Giving During Time of Profound Wealth Disparity”In the nuanced trade-offs between financial markets and economic theories, a false fable that I’m calling “Goldilocks and the Big Bad Wolf” emerges as an apt analogy. While traditionally the Goldilocks fairytale features the Three Bears rather than the Big Bad Wolf, the mixed metaphor illustrates the delicate balance and potential threats within the prevailing economic landscape.
Continue reading “Goldilocks and the Big Bad Wolf”Jeremy Siegel, professor of finance and investment adviser, coined the phrase “Stocks for the Long Run” in 1994. Two dynamics of the last 40 years have turned his aphorism into an axiom of U.S. investing.
First, U.S. life expectancy has risen markedly in the last generation, increasing steadily until the COVID pandemic. Retirees can now require 30 years of income after their 40-plus years of working. Stock prices tend to rise on very long timelines, making equities attractive even for investors entering retirement. Especially given the low, fixed-income, security yields of the last decade, the total returns from equities, which have been unusually high, have become all the more attractive.
Continue reading “Stocks for the Long Run?”This week features a guest post by MCM analyst Lane Miller.
The cyclicality of the recreational-vehicle (RV) industry is widely acknowledged. Whether it’s the best of times or the worst, the Wall Street Journal argues that northern Indiana RV manufacturers are a hyperbolic expression of broader economic trends.
Typically, the number of units shipped craters during recessions and booms between them. That business-cycle correlation is longstanding. The decline in shipments during the 1970s, however, proved to be secular—that is, shipments generally trended lower even during the subsequent business-cycle expansion—from which the industry took decades to recover. The last 10 years saw a secular buildup to the previous peak from the early 1970s. The recent decline in shipments begs the questions whether the recent weakness is cyclical or the early stages of another secular retrenchment?
Continue reading “The Collapse in RV Shipments & What Comes Next”“If I were to remain silent, I’d be guilty of complicity.” –Albert Einstein
On November 13 the PBS News Hour aired a five-minute segment on Donald Trump’s Veterans Day campaign rally in New Hampshire. Ruth Ben-Ghiat, a historian specializing in autocracy and Italian fascism, provided a scholarly assessment, which left me no choice but to sit through Trump’s two-hour monologue. After all, I was about to write a summary of the 12th and final lecture in a Propaganda and Persuasion Great Courses series on the capstone subject of misinformation, disinformation, and conspiracy theories.
Continue reading “On Silence and Complicity”Blogger’s note: Edward Chancellor’s monetary history tour de force, The Price of Time (August 2022), was sent to clients in the Christmas of 2022. It elicited more positive responses than any book gifted theretofore. Its theme continues in Chancellor’s latest Breakingviews column, provided below.
Continue reading “Why An Economic Soft-Landing May Prove Elusive”The investment of capital often takes one on a perilous journey through deep woods of at-times bewildering economic phenomena. The task of navigation is a never-ending quest that requires arriving at a rational estimate of the intrinsic value of assets or even entire markets. Executing this objective with relative success is the means to safe passage through the forest.
Continue reading “‘Price Is What You Pay, Value Is What You Get’: Navigating the Financial Forest”“Not everything that can be counted counts, and not everything that counts can be counted.” This quote, often attributed to Albert Einstein, means that not everything that one can measure has value and not everything valuable can be measured. This concept applies to various aspects of life, including economic indicators.
Continue reading “Why Is It That Some Things That Count—and Can Be Counted—Are Not?”