During their recent episode of the VALUE: After Hours Podcast, Taylor, Brewster, and Carlisle discussed Buffett’s Next Op-Ed $BRKB. Here’s an excerpt from the episode:
Tobias: Buffett wrote the article sort of semi-protesting about the Greenback emissions.
Jake: Turned into real emissions.
Tobias: It just disappeared that article, like he wrote that and then it just never got– there’s just no kind of follow-up on it. It was funny.
Jake: Yeah, that was a good one, that was worth rereading.
Tobias: Do you remember the name of it?
Jake: Wasn’t it Greenback Emissions, something like that?
Tobias: Could have been.
Jake: That was in the title at least.
Tobias: It must be old now. It must be 10 years old. Something like that. More than that, maybe.
Jake: I feel like we’re long overdue for a Buffett op-ed of some kind.
Tobias: Yeah, he seems to like– one every 10 years. He had one in 2000, calling The Top of the Dotcom Boom. And he had one in, whenever that came out, 2010, something like that. Greenbackd Emissions just seemed to like– I don’t see that quoted a lot. I don’t see that quoted ever.
Jake: Yeah, I want to say that one was ’11 or ’12, maybe. Could be misremembering.
Tobias: That feels a bit right.
Jake: Yeah, we need an update.
Tobias: So, what’s the 2020 version or the 2021 version? What’s on his mind?
Bill: If I were him, I’d just be like, I was sitting there in cash for like five years and then, my opportunity came and then the government just ripped it out from my hands. And now, I’ve got nothing to do.
Tobias: That’s every value guy.
Bill: That will be my op-ed.
Tobias: Is that the Fed front running? Literally not the bailouts?
Bill: Yeah, I mean, everything that he had– maybe his op-ed would be the end of prudence. Why prudence is no longer prudent.
Jake: Junk bonds at 2% yield. That’s hard for him to make money in that world.
Tobias: Did work with Apple.
Bill: Yeah, but you can’t wait for that. I mean, that’s the problem– [crosstalk]
Tobias: What do you mean? That’s literally what he does. Just think about what he’s done.
Bill: He’s underperformed for a while though.
Jake: You can’t not wait for that.
Bill: I don’t think that you can make a go-forward investment strategy waiting for something like Apple and then swinging up big. I don’t think that that’s the smartest decision. I think there’s too much opportunity cost as things run away from you.
Tobias: He sat there for– I don’t know how long since the last acquisition. Is it BNSF, is that the last big one before Apple? Is it as long as that?
Bill: No, he had Precision Castparts, right? Was after BNSF. That was big–
Tobias: Pretty close and it’s still there– [crosstalk]
Bill: It wasn’t that–
Jake: [crosstalk] –recently, that was– But not as big as BNSF, though.
Tobias: It’s literally– he said he regards it as Berkshire’s third big business.
Tobias: So, every 10 years or so, you get an opportunity to buy a third big business. I don’t know [unintelligible [00:33:25].
Bill: That’s fine. But how much cash is still on the balance sheet?
Tobias: Cycle’s not over yet, brother.
Bill: But my point is he had the shot in March, and it was taken from him. A lot of cash could have come out off the balance sheet, and everybody got bailed out. Maybe I still think that was the right thing to do for society, but I don’t think it was the best thing for him. I mean, if you can no longer be the lender of last resort, why carry all this cash?
Jake: That’s a short-term win for society, but probably long-term loss. We’ve learned nothing, and we’re going to get bigger problems down the line because of it.
Bill: Oh, I think we learned something. I think we learned lever up.
Jake: Well, that’s what I mean.
Tobias: The wrong lesson.
Jake: It’s the wrong lesson.
Bill: But because everybody’s pushed to do it, I think it increases the probability that they try to bail it out again. And then maybe you get a situation where the whole system cracks, that’s possible. But then what good’s your cash?
Tobias: I think what it illustrates– when you look through history, and you see there are all of these dotcom boom, it was pretty all-encompassing. All these other sort of periods of speculation in the market, it’s easy to read about them when you’re reading a paragraph in a book or you’re reading a chapter in a book and that takes half an hour to read and then the thing lasted a year and a half or however long it lasted. Being in it is a completely different thing. I think it’s pretty clear in some kind of speculative boomlet bubble driven by very low interest rates and lots of things going on.
Bill: Inning two.
Tobias: Yeah, there are lots of people out there who’ve got an opposing view, and that’s what makes it so hard. In the dotcom boom, there are lots of people who were just like, “Yeah, this is the way the world is going to be from now on. And if you don’t swing and you miss–
Jake: They were pretty much right.
Jake: It took much longer.
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