What new investments have you made this year?

[Berkshire_Bull]

I think that Berkshire is a good investment and may outperform the market going into the future, but I don't know if another person could keep a handle on all the different subsidiaries. I think Berkshire's cash hoard is a big mistake. By sitting around and getting 4% instead of the 10 or 12% Buffett could get by buying companies isn't a smart decision. If you earn 4% for 5 years, what do you have to earn over the next 15 years to get to 12% over 20 years? (I'd post the answer but I don't have my BAII handy) but I can tell you you'll need somewhere in the neighborhood of 15%. The other question is what is the value of Buffett himself, a man that has generated over $7 billion of trading/ arbitrage gains over the last two years? Berkshire is undoubtedly a valuable basket of businesses, but it is "dear" to many people. Many people have fallen in love with Buffett's story, and thus the security itself. That is when it is time to stay clear. There will be a time to buy Berkshire, I'm afraid now isn't the time.

 

[lazyday]

Thanks th and Berkshire_Bull for your comments.

The cash in BRK doesn't bother me, as I don't mind some in my portfolio right now, and holding it in BRK is better to me than in a short term bond fund. About a third of the BRK purchase would come from short term bonds.

Buffet has mentioned his own mortality in the letters, at least this last one. I had thought the market was pricing in the risk of losing Buffet in the near or midterm, and personally suspect the company would do fine without him (fine as opposed to exceptionally well) but after reading your comments am rethinking. I'd previously thought of buying a 5% to 7% position, and later if Buffet passed and people overreacted, buying more. But maybe people aren't much pricing in the possibility of death yet (on top of thier underestimating the value without him) and when it happens the overreaction could be so severe that it would be better to wait, rather that my taking the risk of buying now.

A little morbid, but I do need to protect my portfolio in case th is right about the 1/3 to 1/2 loss. I usually don't worry about buying something cheap that might get cheaper, but in this case, may make an exception.

 

[cute fuzzy bunny]

I hope Warren lives to be 100 and is still a shark in the waters the day he does pass on.

The profile of the average non-institutional investor is more like a college football fan than a pure investor...from the long term ownership to the stadiums full of people coming to the annual reports. Thats whats going to be the problem when something "bad" happens.

The big cash position doesnt seem a problem to me either. Its small comfort that when I cant find anything reasonably priced to buy, neither can Buffett. Its better to hold cash in hand and wait for the right buying opportunity, as Buffett does, then to force the issue and plow the cash into 'maybe' deals.

This goes back to my original (when I first got here) ponderings about initial investment points. That once you're in, and nothing significant has changed about the character of the investment, stay in it. But that initial entry point makes a big difference. Plowing your nest egg into the S&P500 in january of 2000 vs October of 2002 makes a big difference. Too bad you cant know for sure.

In that vein, I've been looking over this long running thesis about breaking 200 day moving averages. Seems there might be something to that. The idea is you watch your index and when it breaks through the 200 day moving average and stays below it for at least 5 trading days you sell. When it breaks above and stays above 5 trading days, you buy.

That would have taken you out of stocks in october of 2000 and put you back in in april of 2003. Would have kept you in the market almost all of recent recorded history other than that.

We've been skidding along the top of the S&P500s 200 day moving average...last few trading days activity has us heading sharply towards it. Coupled with ECRI's leading economic indicators that show a sharply cooling economy starting this month and carrying through until near the end of the year...methinks it might be getting close to the time to slip away from some of the heavier stock holdings and into cash.

If I wasnt already ~25% in cash and my stock holdings werent 90% large cap value...I'd be thinking about it.

 

[VoyT]

Mainly moving things around right now .... rearranged the 401K to put money $$ into international funds. Dumped the company-match stock and reallocated the proceeds. Still chasing yields with the cash ...

 

[lazyday]

I agree that entry points are important.

Maybe a way to consider it could be that it is important to enter when spending from cash, at a point when the asset is cheap in an absolute way. (And ideally, also in a relative way.)
And, to enter when selling another risky asset, at a point when the asset is relatively cheap.

For example, in a recent post in this thread I said I bought VUG, a LG index, and sold something else. Ordinarily I would consider that a very icky thing to buy, but perhaps it is relatively cheap, even though it is absolutely expensive, if that makes sense.

The moving average thing just makes me feel icky all over though. I know there has been some academic research supporting technical stuff but I just cannot go there. It's not the way I want to make my decisions and I couldn't stand by them afterwards. Also, I'd be concerned that with so much work being done on technical analysis, that something which really did work in the past could stop working at any time, simply because enough money is invested using rules based on it.

If that happened with value investing, a good value investor would be naturaly led towards just buying the market (or cash) if they were following their value instincts. You don't need to know when your rules have become too commonly followed by others.

 

[BUM]

Added Pimco's PCRIX and Vanguards Euro Index. Watching HNZ and Surburban Propane

BUM

 

[Donner]

Not re-arranging any deck chairs. Got my seat in the lifeboat.

Donner