-
Unknown A
So did Warren Buffett and Berkshire Hathaway just launch an attack against Trump and Musk? And what does Warren Buffett have to say about investing this year? That's the subject of today's video, and let's jump right in. So is the headline, warren Buffett Warning of Scoundrels and Fiscal Folly slashes exposure to U.S. stocks. And in fact, when I saw it, I was like, yeah, that's probably Trump and Musk. He doesn't use it. It doesn't say their, you know, exact names because they want to stay neutral. But I'll read the language. I'll let you guys decide. So this is from Warren Buffet. In his annual letter, he says, true, our country is in its infancy, sometimes borrowed abroad to supplement our own savings, but concurrently, we needed many Americans to consistently save and then needed those savers or other Americans to wisely deploy capital thus made available.
-
Unknown A
If America had consumed all that it produced, the country would have been spinning its wheels. And here's a part where he refers to probably Trump and Musk. It says, the American process has not always been pretty. Our country has forever had many scoundrels and promoters who seek to take advantage of those who mistakenly trust them with their savings. So again, he refers to people, right, as scoundrels and promoters and says, who seek to take advantage of those who mistakenly trust them with their savings. And I think that that kind of people, right, scoundrels, promoters, is Trump and Musk. Buffett also continues and says, but even with such malfeasance, which remains in full force today, and also much deployment of capital that eventually floundered because of brutal competition or disruptive innovation, the. The savings of Americans has delivered a quantity and quality of output beyond the dreams of any colonist.
-
Unknown A
So he's kind of talking about how America started and sort of where we are now. So that's just part of the history, right? Scandals and promoters. At the moment, though, Buffett is sitting on a pile of cash. And this is a tricky thing for him, as he's got to tell investors, hey, this is how I'm investing, you're running, et cetera. But if you see sort of, how can I say, storms ahead, you don't necessarily want to throw all your market, you know, at one time, and that's, you know, exactly what Buffett is doing is, is, you know, being cautious. You can see here, this is the Berkshire Hathaway compared to the S&P 500. So he looks like they've outperformed it a bit. We're In a bit of a down. Downturn. Right. I think you guys know the last month or so. And if you're curious what Buffett holds, his largest holdings are Apple, American Express, bank of America, Coca Cola and Chevron.
-
Unknown A
He's been trimming though from Apple. I think he sold like half his shares. And then recently he's been selling off some bank of America and some Citibank also. He's been, as mentioned, sitting on cash, treasuries, et cetera. It just keeps going up. This is his cash pile here. We're talking in the billion. So it's like close to 350 billion. I mean you can see it just keeps selling. And essentially they still have stocks, equities, et cetera, but they're not buying in, you know, full force. This was the blue. Dark blue is purchases, the light blue is sales. So you can see there, I guess they were buying more heavily in 2022 lately. They're just mostly selling. You can see it, the selling has slowed, but he is still sitting on a bunch of cash. It's not really buying. The question is going to be, I think for Warren Buffett in Berkshire Hathaway is like, when's he gonna leave?
-
Unknown A
Exactly. I think it's gonna probably be sooner than later. Buffett is 94. And you can see the headline here. Warren Buffett's letter confirms it won't be long before Greg Abel replaces him as CEO. This was the statement from Buffett. He says, At 94, it won't be long before Greg Abel replaces me as CEO and will be writing the annual letters. Greg shares the Berkshire creed that a report is what Berkshire CEO annually owes to owners. And he also understands that if you start fooling your shareholders, you will soon believe your own baloney and be fooling yourself as well. Warren Buffett always has a bit of a sense of humor when he writes these things. Yeah, he's 94. And you know, Charlie Munger passed away, I think it was last year already. And it'll, it'll be a different world when the rains, the range reins change hands, so to speak.
-
Unknown A
Buffett also says here, which I thought this was interesting, he says, talking about last year's performance of his companies and investments. 2024, Berkshire did better than I expected, though. 53% of our 189 operating businesses reported a decline in earnings. We were aided by a predictable large gain investment income as the treasury bill yields improved and we substantially increased our holdings of these highly liquid short term securities. So that's interesting. 53 of the 189 operating businesses recorded a decline in earnings. So, you know, not only is the market overvalued, right. In my opinion and I think warm opinions. Well, just look at what he says and what he does. It's both, right? But mostly what he does. He's sitting on a bunch of cash, not really buying so much. And he's even saying, you know, over half his companies are declining in earnings, right? They're making less money.
-
Unknown A
He also says here Berkshire's equity activity is ambidextrous using, I guess, left and right hand is what we're saying. In one hand, we own control of many businesses holding at least 80% of investee shares, generally owned 100%. These 189 subsidiaries have similarities to marketable common stocks, but are far from identical. The collection is worth many hundreds of billions and include a few rare gems, many but far from fabulous businesses and some laggards that have been disappointment. So, you know, not everything they do is absolutely fantastic. We own nothing that is a major drag. So no big mistakes, but we have a number that I should not have purchased. That happens, right? So can't be perfect all the time. He says here. On the other hand, we own a small percentage of dozen or so very largely profitable businesses with household names such as Apple, American Express, Coca Cola and Moody's.
-
Unknown A
Many of these companies earn very high returns on net tangible equity required for their operations. And yet our partial ownership holdings were valued at 272 billion. Understandably. Really outstanding businesses are very seldom right. It's very hard to find the really good, you know, businesses and slash investments offered in their entirety. But small fraction of these gems can be purchased Monday through Friday on Wall street, and very occasionally they sell at bargain prices. So, I mean, what he's kind of implying here is, is it's hard to find good deals, but you know, when they can at bargain prices, they'll pick them up Monday through Friday when the market's open. Although I'll say this, it's interesting because Apple's been a really good investment for them. They generally don't buy a lot of tech stuff, right? He tends to be like banks, Coca Cola, you know, stuff like that, and insurance.
-
Unknown A
He's in that as well. I mean, there's a lot of warning signs, though, coming from Buffett when you kind of read between the lines as we're going through his language. He also says, talking about the cash situation, despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in Equities, Right? So he's saying, hey, you know, yes, we have a bunch of cash, but know we still have stocks. The preference won't change. While ownership in marketable equities moved downward last year from 354 billion to 272 billion, the value of non quoted controlled equities increased somewhat and remains far greater than the value of marketable portfolio. Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities, mostly American equities, although many of these will have international operations of significance.
-
Unknown A
Right. So he's saying, you know, has a preference towards American companies, but American companies do business abroad. So it's not like you're only investing in just America. Essentially, Berkshire will never prefer ownership of cash equivalent assets over ownership of good businesses, whether controlled or partially owned. So that, that's a really interesting point there. Right? So for those of you who are like, hey, you know, I'm just going to be all cash, put my cash in the bank of mattress, but you know, some people do that, at least according to, you know, Warren Buffett. He's saying, you know, if we can find a good business, right, Or a better way to say would be like, find a good business at a good price, they would always prefer that over cash, right? You do want to get a return on your money. Other things they talk about often is, you know, if someone like a Trump or Musk, you know, say, ruin our economy, we got runaway inflation, then yes, you're probably better off in equities and then cash.
-
Unknown A
And that's sort of why you would prefer that. I understand, though, in this, you know, percolator cycle, like right now, right now it's tough because it seems that everything is overvalued, but it's hard to time the market. So, you know, that's why you diversify. You can't just put all your eggs in one basket and, you know, make these bets. Now, Berkshire Hathaway and Warren Buffett can do things differently than we can, meaning that they can make big block trades or they may have, you know, information that we don't necessarily have. Now, you know, whether or not they inside trade, I'll let you guys be the judge of that. But, you know, they're in a little bit different position than the average person. So for many people, hey, you know, put a little bit of money in Berkshire Hathaway's, it's not crazy. And so that's why you go through the letters and, you know, some of the stuff that I think with, with Warren Buffett's interesting though, because many people say that his cash thing is, is also preparing for his successor to see sort of what direction that they take.
-
Unknown A
So we'll see that's. That's able. He also says here paper money can see its value evaporate if fiscal folly prevails. Right. So that's the warning. In some countries, this reckless practice has been. Become habitual and in our country's short history, the US has come close to the edge. So that's a real warning. Right. For Trump and Bus. So he's talking about promoters and scoundrels and also, you know, the warning about fiscal folly. Fixed coupon bonds provide no protection against runaway currency. Right. So again, be careful of inflation businesses or printing, I guess you could argue is what he's referring to there as well. Businesses as well as individuals with desired talents, however, will usually find a way to cope with monetary instability as long as their goods or services desired by the country's citizenry. So, you know, when you're looking for investments, and this is kind of obvious, but, you know, you want to just go through this language, you find companies where people find value in what the company offers.
-
Unknown A
Right. Essentially find good companies, run well, provide, you know, goods and services that people are going to need and they find value in. And so meaning that don't ever think that like, hey, you know, investing is never going to work. It's too scary, these kinds of things. Just think about logically speaking, you know, if there's certain products that you will never stop buying, like never stop buying. And that company just always seems to turn a profit every single year. It's a good investment. Right. Essentially what we're talking about. So that's how we refers to it. It says, however, usually find a way to cope with monetary stability as long as they're the. I talk about good companies as long as their goods or services are desired by the country. Citizen. Citizenry. So too with personal skills lacking such assets as athletic excellence, a wonderful voice, medical or legal skills, or for that matter, any special talents.
-
Unknown A
I've had to rely on equities throughout my life. So he's making a joke that, you know, he invested in other people because he doesn't have a good voice, medical or legal skills. It's kind of funny or special talents. But he, he's being humble here. In effect, I have depended on the success of American businesses and I will continue to do so. So he's saying, hey, part of my success or a big part of my success is Investing in other people's, you know, success and talent. So Buffett is always complimentary to others in that way. I talked to us for in the last video. I just want to show you again, consumers are worried about the, you know, future in the economy, but in terms of, like, you know, investing as a whole, when everyone's running away from the market, which actually hasn't happened yet, is usually wanted to be doing the opposite is buying.
-
Unknown A
Buffett is putting some money into Japanese equities. I'm here in Korea, so, you know, we invest in Korean stuff. So it's, you know, a little bit different than what you guys are up to. We do have some American stuff, but, you know, we have Korean stuff. And like, for example, sometimes things are opposite. Right. So I think maybe the last month or so, American stuff has been going down. The Korean stuff has actually been going up. Chinese stuff has actually been doing very, very well. I'm a little bit leery of the what's going on in China. So I can see definitely, yeah, some of the stocks have been. Have been rebounding. But, you know, it's just the transparency over there is tough to gauge. So just take that, you know, as a word. Say you can diversify into that. But I wouldn't necessarily go YOLOing on that kind of stuff.
-
Unknown A
Japan is kind of a similar situation as Korea. I'm more biased to Korea because I see the news here locally every day and see who the companies are. And I'm actually quite surprised that Warren Buffett's not interested in Korea, but maybe war ahead of Buffett, who knows? Or maybe he has relationships in Japan that he's got to keep track of. But those are where some value is at. I don't think warranty. Buffett is really into European investments. I don't ever see anything of that. If I miss it, you guys can let me know. But, you know, Europe's a different situation than US or Japan. But you can make the case that, hey, you know, with the war perhaps coming to an end in Ukraine, the way that is looking, maybe, you know, European equities will rebound. I'd like to hear from people in Europe on that and, like, what are your prospects or growth and that kind of thing.
-
Unknown A
So that's what Warren Buffett had to say. Just want to go through the thoughts of an annual letter. You can find the whole thing online if you want to read it. It gives more details of sort of like, personnel and some numbers on their exact investments. But that's what. That's what I took away from it. So do appreciate your time, and I'll catch you all in the next video.