Was watching a couple of interviews from Bill Smead where he makes a compelling-sounding case for being bearish in the short term, in particular with regards to Quality investing, citing Buffett telling his shareholders back in 1967 or 1969 that his and Graham’s version of quantitative value investing had been “endlessly picked over”, and then saying the only other time Buffett has said something similar was in his 2023 letter, but this time (Smead assumed) he was talking about Quality investing guided by Munger.
The catchphrase in both interviews was that Smead considers Buffett extremely bearish due to the humongous cash pile BRK has amassed, and that he’d done the same 2 more times before, in 1999 and 2007. Plus some sound bites of Buffett saying he doesn’t like undeployed cash, but that he’ll amass cash if he feels it’s the right thing to do.
Smead runs a value fund which has done great indeed, so it’s hard to parse what’s legitimate alarm bells and personal marketing, even in an eloquent, grown up interview. Smead himself has a large BRK.B position too, by the way, so perhaps he’s hoping that something happens and BRK gobbles up a lot of stuff for cheap. It’s just too tempting to read into Buffett’s calling BRK a “fortress to its shareholders”, and carry on with the thought that if there’s a crash they will be there to benefit, and makes me a bit annoyed my own BRK.B position is small.
Personally, I am new to this, just started in early 2022 and have been pretty aggressive with saving. I ran a few scenarios and found that if I pause contributions until the end of the year, if we get another 10% in VWRL (a RARE thing to get, it’s only broken 24% in a year three times since inception in 2013, and we’re at 15% YTD already) my existing contributions will do 5x gains as an absolute number compared with continuing to my standard contributions to the end of the year.
Dunno what’s the right answer, the question is “if you pile up cash, when does the opportunity cost start to bite?”. The answer is hard to give, maybe next year will be like 2024 YTD, in which case the cash will start being detrimental in about 6 months…and then what? Perhaps I’ll become fearful to deploy a large amount.
I’ve come to decide to halve my contributions, but not pause them, as a middle ground solution.
Anyone having such mental masturbations as I am?
But better sooner than later.
.
