264- Berkshire Hathaway Meeting Recap and Implications
Everybody this is built town and Danielle town. Welcome to the invested podcast. We are obviously in the middle of pandemic and we have massive things going on in every direction and we just got to hear from Warren Buffett this weekend and I think he had quite a lot to say particularly between the lines. And I think it's going to be really valuable for us to to chat about that today. So let's do that what you say. Wow we're diving right in. This is so for us. This is some serious things going on out there and we need them. There are serious things so it was the Berkshire hathaway annual shareholder meeting on Saturday. And this is normally an enormous woodstock of capitalism type of convention in Omaha Nebraska. I'm wearing right now. My shirt that I got there. Last year was the these woodstock of capitalism shirt. You good shirt when I got there. Last year wasn't nearly soon I did. Well the five K. Thing you know shirts much much better. This one's pretty awesome and it was a gift her friend so I love it so yes. It's usually this like fantastic. Gathering of investors and shareholders from all over the world and has been growing and growing and growing every year. But obviously this year it was not canceled but the the gathering part of it was cancelled so they put it online and streamed live on Yahoo Finance. If you missed it you can still watch it. It's still up there on Yahoo Finance the whole thing. It's about a five and a half hour video including the pre show in the post show and it's worth watching because it was sort of an interesting different situation so usually it's Warren Buffet and Charlie Munger onstage together. And that's it this year. It was Warren Buffett and Greg Able. Who's one of the? I don't know what his exact title is. But I sort of consider him to be be a vice president Bush person. He's kind of like in charge of all the stuff below Warren and Charlie and sort of next to a g chain and Ted Wexler and todd combs and and he was the closest geographically he apparently he lives about a two hour drive from Omaha. So He's the guy who drove in was on stage with Warren and what I thought was so interesting about. This is that they kept their commitment to the basketball arena where they have the meeting every year and they went ahead and set up their table the way it looked like just every other year and had put all the cameras in there and it just was this very strange empty set with nobody there except for this table with two guys. And that's what's on camera on young finance. It's so strange it's A. There's a lot going on there that I think is really important for for all of our listeners to understand and I don't want to kind of dive into that even going on with the setting no la going on with what Buffett was saying. Oh well yeah I was just giving the setting. Yeah Okay Good. Good good setting setting okay. So you're like fine. Whatever but I think I think the setting is important because the way he talked was different than other years. So go ahead. Yeah I think the way talked was vastly different than other years. If you'll remember back in two thousand eight he was really busy buying up companies in in the in the drop and he was very very out front about it. He said You know we're we are jumping in there and and you know we're buying now and what he said this time is. We have made any purchases we are. We haven't done anything because we didn't see anything attractive to do. And he's holding onto his capital basically says he wants to make Berkshire like stay at Fort. Knox and the implication there is I think well. I shouldn't say it's scary. Because essentially what he's saying is we don't know what's going to happen. And the range of possibilities of what could happen are enormous Which means that the range of possibilities includes what Dalia thinks is going to happen. Which is where already in a depression so I'd buffet is taking that into consideration and saying you know what if we're GONNA start putting capital to work. We can only do it when we're quite certain. That Berkshire is solid We've got one hundred thirty seven billion dollars. We have to make sure that Berkshire is rock. Solid can't miss on any of its obligations. It's got to be able to deliver on all of his obligations. Whatever those are and for that reason he's also not buying back Berkshire stock even though it hit down below. One seventy briefly. Yeah so what happened is he. Showed the the balance sheet for for the first quarter and it showed that they had sold off all of their airline stocks and not really bought anything of significance and then he said. I don't have to show you this and I normally wouldn't but this year I'm going to put up his April Balance Sheet. Which showed that? They hadn't really bought anything of any significance and then he basically said like that's just kind of how it is. He didn't really explain it. He said we want to make sure that we have enough capital. We have enough money to be Fort Knox to to be ready for whatever happens and we don't want to be dependent on the kindness of our friends and we are. We don't want to be dependent on the kindness of our enemies and we really don't want to be dependent on the kindness of our friends and basically he said that over and over over the roughly four hours of him talking without really saying anything more than that which I thought was rather frustrating. I like him to just come out and say why he's conserving all of this money. It's because he thinks something really bad could happen but he didn't actually come out and say that he just kept saying we. WanNa be ready. We don't know what's going to happen. There's no way to know nobody knows but we're going to be ready. And the reason it's been a chunk of time on on the economy's performance in seventeen eighty nine right with a focus on one thousand nine hundred eighty nine and nineteen fifty one which is a period of time that took the US stock market. Well over twenty years to get back to where it was right right so that should be a clue I think. Yeah it was the sort of juxtaposition of he spent the first forty five minutes giving like a basically a US economic history lesson and ended it with. That's why I believe in betting on America. I think anybody who bets on America's GonNa do fine and then twenty two years from now. Well he didn't say that part for that was clearly. Yeah there was on America. Put Your Money. In Index Fund in twenty two years from. Now you'll break even. That was clearly the implication to stick with it and from there. He went to the balance sheets where he said. We didn't find anything attractive to buy in March at the low of the market. He said people were starting to call him. And Charlie right as the market to that low around March twenty third. They were starting to get calls and then he said that the second the Fed acted and put all that money out there to be available to companies The calls dried up and they got terms better than Berkshire would have given them from the government from us from the taxpayers. We gave them terms better than Berkshire would have given them so. I'm really curious what you think about this. What I got out of this and I'm I'm I'm sort of naturally leaning toward being less confident about the ability of the economy to come roaring back and confident when last week. You told me that it was probably going to be a depression and we were already in it now. I'm thinking wow it's more than probably I'm thinking that the impact of all of this shutdown for example. The impact on travel talked about it. Briefly is that there is a huge domino effect that goes on with the economy and employment and so fewer people travelling means fewer jobs in all sorts of industries He also said that the energy real estate and retail industries are all facing gigantic problems. That are are likely to reverberate. All the way through the economic system and into the banking system in spite of the fact that the banks are in better shape than they've ever been in history probably And I think he added that this is a great time to borrow money money. Yeah amazing and and yet that means the flipside is. It's not a great time to lend it right. And if you're a banker you probably already figured out right. So man alive. Think about the industry that he highlighted there that are in really bad potentially in really bad trouble real estate gigantic industry all right And and think about you okay can borrow money which is great for real estate. You'd think except that people are going to be pulling back from buying stuff And if you are expecting that it's a bad time to lend. What could that mean? Maybe it means it's Interest rates are going to go up in which case you don't WanNa lend long at a low interest rate the retail industries. We all know what's going on with shopping centers everywhere. There's virtually shut down and are trying to figure out a way to reopen. But are people going to congregate right? I can tell you I can answer that one. I can answer that one. Yes yes I agree with you. People aren't going to Congress. We we send hundreds girlfriend. Alexis down to pick up something at. Lowe's that we needed and she had to wait two hours in the parking lot them to bring this thing out and you order online and pick on the. Yeah Yeah exactly. And they just were overloaded. Parking lot she said was packed packed. Okay I mean people are going to go to the shopping centers. There's no doubt in my mind so I think that the risk for retail shopping centers is a little over overstated. If you have the right stores in there so there there's something there maybe we can invest in. The energy industry is a trainwreck. Obviously I mean. I don't know if you knew this. But the price of oil in the United States in Texas briefly hit minus forty dollars a barrel. Yeah minus thirty seven. I think okay minus thirty seven meaning come and get it and I'll pay you to take it away and is currently hovering around twenty Which adjusted for inflation means? We're at Lowe's historical lows. We are though like this isn't just sort of like. Oh my goodness can like. We stopped using oil. So yeah you stopped driving less. Saudi Arabia flooded the oil market at the same time. Like yes. This is. What happened is brilliant. Wasn't it was like I? It coming two months out like this is happening. You know and it's going to frankly not get better actually. I've been surprised that the prices bounced back so quickly. But it's not going to get better very quickly because we're not coming back to using the kind of oil. We used to use very quickly but it will start to come as people start flying and using offices and traveling again so she brings us to the next question or are people going to travel and fly and US offices people will. Some people will for sure pressure by that piece written for show. Fine I mean. I see pictures online of people on airplanes. And what the airplanes are you airplanes. That are packed full of people. Yeah because I think we're going I think because they're running so few flights that No Way I'm getting on an airplane will meet either. But we don't have to if you were if you were dying. I would get on airplane right like you know what I tell you. I would say but I'm saying like there are situations in which you're like all right the benefit outweighs the price here. I'm going to get on that airplane and lots of people are in those situations I would tell you I'm dying. I don't want you to come and get this stay home and we'll zoom right up until the last second. Oh that sounds great but look at. There's another industry gigantic industry. That's in trouble right. Which One k. I still I'm astonished. I The cruise lines of course would be the last place I would ever go right. Well and their full their full for the fall. Apparently no-one thinks like me. And they're all just going to go get on a cruise ship together. I know I know so so I do struggle a bit with these sort of doomsday views. That no one's going to go back to realize because I think we've also seen it. Yes not as widespread. But we've seen it like after SARS and after murders we saw that in Asia. They went back to normal life but a lot of them were masks and it became normal in Asia to wear a mask around when you're traveling on an airplane and people in the West wrote. You know generally didn't do that and if you do it you get weird. Looks and I think we're going to start to to. That's going to become more normal across the entire world but people are still going to get on the airplane. They're just gonNA wear the mask so I think. I think there's one thing about Berkshire that that gives buffet an insight that we should pay attention to for sure. And that's how broadly diversified they are. And how many industries they're in EPA with some of the best people in the in those industries working directly for buffet. So he gets to talk to them. They send him to be able to across the economic spectrum like unbelievable view and so. Here's why I think the stuff I'm saying. And you're saying like people are going to congregate people are GonNa go to the mall. People are going to go on cruises we learn. Yes all of that. I think is right. And that's why Buffett didn't come out and say hey guys we've got a huge problem here but the question is if the virus comes back in a major way and we don't have a treatment and we don't have a vaccine then that's when all bets are off and I think that's why he was sort of saying over and over like I don't know what's going to happen it could be bad. It could be fine but I don't know what's going to happen so Berkshire is prepared either way right exactly and for us. What this means to me I actually is that Burks I'm GONNA take it. The buffet is making Berkshire Fort. Knox Okay but you and I don't have to be Fort Knox. We don't have to be prepared from because of obligations to pour out billions of dollars. We don't have to do that. We're not backstopping anything except US right so we have to be Fort Knox tasks but not to anybody else. We're not obligated anybody else. For anything and that changes the picture quite dramatically in terms of our comparing Berkshire survivability to our own survivability Berkshire has to be able to deliver on all of its obligations as an insurance company. Yeah and and and to keep all of its sub businesses going properly might need capital We don't have to deal with that. We just have to be us. Get us through this right and so if if we are and what that might mean though is that we got to watch out for our jobs right. Make sure that we're going to be employed. And if there's a lot of Of Companies that have shut down. Then there's going to be a lot of people unemployed if you're not if you're not one of them you know. Thank the good Lord Right. You're in an industry that is doing all right But some of you are going to be an industries that are not doing all right and that means you're gonNA act very conservatively with your money. You're not going to put your money into things that can go down and leave you with half of your capital when you might need your capital right so you you're going to be very very careful about how you use that cash and and what that means to me is a there's a little bit of of a similarity between Burke Shire and the way we're thinking if if you're worried about your job then you do have an obligation to your family and you're going to have to hold onto cash to make sure you're able to handle that and do whatever you have to borrow borrow bunch of okay now. This is not a pinch advice to you. It's not a recommendation. It's just an opinion. Yeah Yeah Yeah I'm GonNa give you an opinion and and And take it as education and entertainment. Only but I'm going to give you this opinion and my opinion would be if I were in that situation where I had limited cash and I was working a job that might go away. I would immediately go borrow as much money as I could. My House I would go borrow on a personal credit line. If I could get it I would load up on cash right now at this ridiculously low interest rate. That's out there you know. We're talking about three percent or something even five percent historically all the time. I've been an adult five percent was like Nirvana if you could ever get five percent which you could never get until just recently so i. I don't know if you would agree with this Daniel but that's what I would do. I would gather in cash I would hoard it. I wouldn't spend it. I'm not going to go out and spend it. I'm just going to make sure that I've got coverage and the reason I'm going to do that is because they can't throw me in a debtor prison. They can't beat me to get the money back. I do have bankruptcy protection. I can go back up. It's certainly don't want to but I'm going to behave. Just like the CEOS of companies that are getting in trouble. They're doing that very same thing right now. They are going out and borrowing every cent. They've got Boeing just did that. They borrowed down every cent. They could get in their rawling credit lines and everybody'll berkshires even bothering my like you just said if it's right for them then it's you gotta think about it and I and I know there's an ethic about not being in debt you know. Certainly that's very good advice. But it's only good advice if you have a job if you don't have a job and you need to feed your family and you need to have a cushion against five years of economic disaster. You are going to wish that you had another hundred grand in the bank. You're gonNA wish you did. And if the downside of getting your hands on another hundred thousand dollars is that you have to go bankrupt because you can't pay it back will. Oh my you know that is not being taken out and put against the wall and being shot all right. You're not going to prison. Take advantage of the system to protect yourself. The people I'm talking to are the little guys. They're not the big guys. They're not people with lots of lots of options that you can exercise on. You know you lost this job but I'm really well educated. I can go get that job. I am talking to the people who are not in that position. They lose that job. They're not going to get another job. Just aren't going to be jobs for that. I think the debt can be scary and really put you in a massive hole and going bankrupt is not the panacea that you're making it sound it follows. You wait wait. Walk me through. I think panaceas a little bit loaded but walk me through. Why Borrowing One hundred thousand dollars losing your job. Not being able to pay it. Back you the they're foreclose on your house right. These are all really rough time stuff. Got A hundred grand and you go bankrupt. You go bankrupt. You know you're not going to go bankrupt at one hundred grand in your bank spending the money. You're not going to go bankrupt till you're broke but I mean look compare that to not doing it. You don't have a job you've still got a mortgage you still lose your house anyway. You Got Three Thousand Dollar House. I think it's a lot to say and I think we don't. I want nothing to do with that advice or recommendation or opinion per people. I think. Put this all on me. And if I'm hearing from regulatory authorities about how terrible that is that I'm just going to refer to them. To See of Boeing talked to him if he can do it. Why can't the little guy do it? Why can't the little guy do it to protect his family and things get bad than UK? You take advantage. I mean bankruptcy laws. Are there for a reason they. We don't want people to suffer endlessly for financial error. And Look. This isn't even financial error that you created this corona virus disaster. And if you can take some degree of refuge by getting loans right now banks are willing to give you loans than your credit worthy and West to say instead. Why don't we say instead? Take advantage of the opportunities that are available to us right now for the P P P the unemployment options that are out there take advantage of the stuff that isn't going to create a permanent not permanent but how long has bankruptcy last seven years seven year. Huge problem but it is permanent. Because you do have to say on forms if you've ever declared bankruptcy for the rest of your life so it is permanent. Now I've financial adviser. I am not a financial planner financial anything but I feel very uncomfortable with the opinion that you just said so i WanNa make sure I put that out there. This stuff follows well. I am not very conservative person. And here's the problem. People who have assets and education don't see the world the same way that people don't have those things see it. I mean you've never been in a position like I've been in in my life and so I don't think I don't think it's fair for you to say that it. It's it's a wrong idea to take advantage in every way of the of the system. I think you should do that if you're if you're a family that doesn't have those kind of opportunities. Doesn't have those kinds of advantages in your life. I would say Dang it you get the cash where you can get it if somebody Linda to you. Then they think you're worth the risk and they're hedging that risk out there in many ways that you don't know anything about so take advantage of it and I honestly I. I'm just that guy I would. I would do that for my family if I thought I needed to do that. To protect you thought I needed to if I suffered a loss of my credibility because I went through a bankruptcy I also happen to know that the year after you go bankrupt is people are massively willing to lend you money. Just why what do you mean you happen to know that I just happen to know? I've seen people go back. There astonished what happens on the other end of it come out of bankruptcy and guess what? People WanNa lend you money. You know why. Why can't go bankrupt again for a certain number of years Gosh but yeah so messed up. Welcome to the real world and by the way do not be a martyr to your credit score. Okay You GotTa do what you gotTa do. And if you're buried under debt and you lose your job in this whole pandemic don't I in my view. I this is just my opinion. Okay but in my view don't be plagued by the bill collectors that are GonNa just harass you death When these companies sell your loan to them and they just turned over to professional collectors who will just climb down your chimney and the only thing that stops him as bankruptcy. You can bankrupt yourself right out of those situations and I would. What are you doing and just like blown away right now really. Yeah you think this is terrible advice. I don't think it's good advice. No advice it's not advice. Just want to say it's an opinion and I admit it's aggressive and I admit it's a little radical and I admit it would be seen by many people who are in mainstream positions to be unethical. I Got Yeah. I'd like to go back to buffet topic for today. Who We're out out out of whose mouth I certainly don't think those words would ever come. No I wouldn't. He sitting on forty billion dollars. He's not gonna say stuff like that. Now come on. I mean the guy like came out of not nothing but a reasonably middle class family. He is not like some guy who grew up on Park Avenue. He knows what what it is to be relatively normal all right and Edwina brokerage represented the United States in the House of Representatives. He not normal his dad also basically lost everything in one thousand nine twenty nine which he talked about in the meeting which was really interesting because he said that the clients stopped like he was kind of embarrassed to be around the clients that he had sold stocks to because then all the stocks crashed and he lived in small town Omaha and he had recommended to these people that they buy and then they lost most of their money and so they he wasn't able to sell stock anymore and I think he said is this right. He said his grandfather owned a grocery store and so his grandfather said I'll give. They had no money so his grandfather said. I'll give you groceries On credit and you can pay the bill later. Buffet was like it was like he wasn't so generous. My grandpa he was a businessman. I don't like the characterization of him. Some guy who liked grew up super privileged. I think he would disagree with that. I think he he certainly says he grew up very privileged in the sense of having all the opportunity in the world. But you know he wasn't rich. Yeah I I'm I'm just thinking. Buffet is not an example of somebody. Who's Normal Chair? He's not arm fair enough. And so leaving behind this controversy. Leave it out there to figure out what you WanNa do and whether you think it's unethical and to go after money may not be able to repay. It's highly unethical and highly dangerous to one's future. So do you think it's highly unethical for serious question? Do you think is highly unethical for Boeing to borrow down its term land. Is that also highly unethical? No if not why is that? Not But why is it wrong for me? I didn't is it for a plumber. Listen go out and borrow. Money doesn't know if he can repay. Boeing thinks very strongly in the ninety nine percent kind of very strongly that it will repay that money. There are many companies that have drawn down on their lines of credit in the last two months. They think they're going to be able to repay it. They're trying to bridge a bridge loan. They're trying to bridge the gap here and get back to normal earnings. So I think Boeing definitely thinks it will pay that money back going going around going. Well we can't wait to not pay this. Why could refit for all of our careers but they also understand that? They wouldn't get length the money if they didn't have assets to cover it and those assets are in fact covering those loans. That's how those people are going to get paid back doesn't mean Boeing's not GonNa go bankrupt absolutely. They could go bankrupt. I mean I still pay the loans back. Even if they bankrupt. Yeah they'll pay them back or most of them back after the insane administrative expenses of a bankruptcy but the fact is the CEO is going to absolutely rely on the protection of bankruptcy laws. He knows that Those lenders are going to lend based on that kind of protection. And that's the same thing with just a little guy the lenders not GonNa give you money. If he doesn't think you'RE GONNA get it back to them especially now right yes but you have just said that your opinion is let you should take money and then basically plan not to pay back that. I've really glad to hear that. No I didn't say that I said that if you that what you should do right now is if you think. There's a chance you can go to you. You're going to be disrupted in your revenue. Let's put it like that. You're going to have serious disruption that the wise thing do be dude copy the CEO of Boeing and many other major companies and load up on cash as quickly as you can and fact Warren Buffett basically said this is a very good time to borrow money we the loans that are out there are four. Yeah Yeah I think he did. You just agree with me. So if Boeing's doing it in order to protect themselves from damage down the road. They're willing to get you know much worse bank looking a much worse balance sheet in order to have have avenues to escape the problem. And that's the problem of not having much revenue as they had in the past. That's the same problem some a you're gonNA have. You can have as much revenue as you had in the past. Get cash now to cover you to bridge over to win. You can figure this out and when the economy starts to return and when you can get a better job and and then and then if you have to as you said you know you can't back with a hundred thousand dollars in the bank agreed but if you have to use the money to get finally down to that place where you are going to make it back into a job you might burn down the whole hundred thousand and you'll be thanking the good. Lord you have it. And that's why Boeing took that money in. It may need it to get to that point where the airline industry recovers. I mean. That's why southwest borrowing as much money as they can right now and they don't know for sure that there will be a recovery. Nobody knows for sure and therefore it is entirely possible that two or three airlines would go bankrupt in the next four or five years. I think they think they're very confident that they're going to recover. I think the question is how long is it GonNa take and be specific? They're very comfortable that they're going to recover because the federal government is limiting them a huge amount of money huge and that totally and I think that they are on and and the reason they're doing that is because the federal government thinks they're critical industry. Nobody thinks your critical industry. Hate to tell ya but nobody's coming to your rescue except you. You better start rescuing yourself ahead of when you need it. The worst thing about banks. They will only lend you money when you donate it. So if you don't need right now go get a pile of it if you need it right now. I'm sorry but you probably not gonna be able to get it too late. So we're the wise. Follow the the examples of the best CEOS in America who are in trouble right now and they are all loading their balance sheet with debt as fast as they can get it as much as they can get it so he should do the same thing I think I mean. That's just an opinion. I'm just saying it's just an opinion. Just an applied do not see why that is any less ethical than what Boeing's doing so let's get back to me buffet and Berkshire Hathaway. I won that one. Tonight you're taught me. What did you think about Greg? Evil sitting next above it and making comments well. I think that's an obvious indication of WHO's GonNa take over of Warren. Get sick this year dies. I think absolutely he's pointing to Greg. Able I don't I don't and Greg is younger than than a Jane. And that's probably why as she'd isn't up there Vowed genius in buffets been raving about him for years. But you gotta you gotTa get a new guy in there. You Probably WanNa get a guy who's not seventy you know it's like it's like Charlie Munger. Charlie Mongers Board Meeting Daily Journal. Like we've just brought in a new director who's seventy five which dropped the average age of the board by ten years or something? That was funny. It was really funny so I think that's a big part of you've got to to really superstars there and I think he picked the one. I mean it's not a final pick but I think that's an indication who's going to be running Berkshire obviously. It's a very strong indication of confidence. Yeah A to that question of who runs yeah. I don't know but I found that he was he was all right like I didn't really feel like he added that much he didn't. He definitely lacks the sort of interesting talk that the buffet gives and the Banter in the stories. And the you know ways of explaining things that make profits so interesting and and obviously hardly anybody is like buffet. He's one of a kind but it was very much like if this is the future. I don't know how much how much longer people are. GonNa get excited about it. But who knows it's an interesting question about Berkshire itself I mean. Buffet was pretty clear that At in previous to the meeting that prior to the meeting that he wouldn't think berkshires massively undervalued. Right now He basically that you were to sell off Berkshire in pieces and pay the taxes And the liabilities. Pay All that off By the time you cleared all the tax bill Which would be enormous. You would have a break even more or less and that might have been a little sobering for Berkshire investors because the stock went down ten percent. This already well not just that he also answering the question about why they didn't buy stock back in March. It wasn't just that they want to conserve money. Although I think personally I think that's the main reason but and why would you spend money buying Berkshire stock unless he had nothing else to do? But also because he said the intrinsic value of Berkshire went down last month burst of all he lost was it. Six billion on the airline investment and then Many of their businesses have been really adversely affected by the Down he said Berkshires intrinsic value has changed and so he didn't really think that actually the price change showed a massive discount the way it would have seemed and I thought that was really interesting so I don't. I wasn't real surprised by that the fact that he didn't buy a lot of Berkshire buying a little. I mean a little few billion dollars worth of March or April now but over the last year. Oh yeah when they bought exactly but they didn't buy a lot and so to me. It's been he's been saying right along more. I think what I'm hearing from buffet as more. We're going to see a time when we can by Berkshire I really cheap. Yeah hit it. I think it's that it's that plus we would rather buy some massive awesome business at eight seventy five percent discount because we're the only ones who can cause we're the only ones with a hundred billion dollars to spare and still leave forty billion on the balance sheet to cover all of our expenses and random obligations that come up so. I think that's what he's hoping for and he doesn't WanNa Penny Ante little purchases here and they're not these being for that he doesn't want the US to crash. But I think he he sees it as a possibility and I think we should too. I do too. I think I mean. I think we're GONNA wrap up here but my prescription for me is going to be sit tight be patient. Charlie said we make money when we wait. That's what I'm planning on doing. We've certainly picked up a couple of companies without. We're we're pretty nicely priced in. And they've gone down from where we bought them and we WANNA buy more But we're sitting in a lot in cash and I think that that's I'm very very comfortable without right. Now that this market will look a lot worse. I think there's a very good chance. This market will look a lot worse in a year that it looks right now and we'll see we'll see if that's true. Yeah we'll see. He didn't answer becky too quick. Didn't ask my question which I was bummed about my question. Was My question was considering that we're in a recession. So many small and medium businesses are going bankrupt and not gonNA come back. People are losing their jobs. Unemployment is at a massive high. Do you think that Wall Street is completely divorced from the plate of Main Street? Ooh That's very sophisticated question. What do you think the answer is? I think it is divorced and I think we're going to look back and go these. What's the vote was that occupy Wall Street thing? We're going to look back and go these like fat cat. Rich people were sending stocks way up with no justification except for a few of them are doing well legitimately have good earnings but the rest of them don't and yet for some reason. Wall Street has suddenly gone. Long-term mysteriously and companies with no earnings going but in a year. They'll be fine doesn't me to any sense at the same time. People are losing their jobs and it's not just jobs it's small and medium businesses are many of them are not gonna come back and they weren't able to get the loans from the government because the US government screwed up the process and that's a whole other story but it's really discouraging and I just don't see these these two. I don't know it's like these two opposing forces but they're not really opposing the kind of Har- and they just don't make sense together. I really wanted to hear from him about that. Like this market is is almost back at its high like why considering all the data why nobody asked him that I can tell you why why and I think I'm very likely to be right. And that is that the market meaning. The vast majority of our money in the market is run by professional fund managers who have learned over the last decade that you should never fight the Fed. It's a it's a fact of life and it's a. It's like a headline. Don't fight the Fed and anybody that's fought the Fed meeting if the Fed reserve raising interest rates. You think the market is gonNA go up and you buy stocks and it goes down like a brick because you fought. The Fed raise interest rates market. Goes DOWN THEY DROP? Interest rates market. Goes up these guys have learned that over and over and over and over again and they're fundamentally traders even though the so called long-term investors dot hold socks more than about three months and they're judged on their three-month performer sector judged on a one month performance. A years forever. You know years like you know light years away so you. You may not have a job in a year. You'd better perform now. And so they can't sit there and wait while their peer group jumps in as the Federal Reserve cuts rates to zero and promises with the federal government to put in six trillion dollars. They can't wait if they wait. They're gonNA look so stupid in three weeks which they did anybody. That waited look like an idiot. The market jumped back boom. And so guess what they. They've made it more volatile there jumping in just out of pure momentum guessing nothing to do with mainstream nothing to do with what's going to happen a year absolutely blind to it out of necessity to protect their jobs. That's why it went Jack and backup all right there right again. Do Not Take Silence. Ask Agreement. Well proportioned give my love the Nuno and stay healthy and you all stay healthy out there to you guys and we'll be talking to you next week. Thanks guys next week. We're going to have an interview With Dan Heath great book called upstream. So check that out. And then we'll be back talking about companies because we've promised you guys good companies that we like and that's what's coming could good depression companies to get onto that list to go. Thanks everybody hi guys. Thanks for listening to invested if you enjoyed this episode and you want more information including show notes and more episodes visit us at invested. Podcasts DOT COM. 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