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“You don’t need to be a rocket scientist. Investment is not a game where a 160 -IQ boy defeats the boy with 130 IQ.”
– Warren Buffett
Warren Buffett is the most quoted person in the history of this newspaper-a crowning achievement of his seven-decade career that he should be proud of.
I quoted him so many times because he has a lot about investment and markets, of course, but also because he expresses himself in the bite of Loksi, Quippy, Metal Sounds that are universally accessible.
He is not doing it down for us, though.
As I can tell the best, it is really how he thinks about investment – and there is a lesson: the largest investor of all time invests mostly through general knowledge.
To invest is so much general knowledge for him that he believes that anyone can do this:
“It is not necessary to do extraordinary things to get extraordinary results.”
“If you can separate yourself … then from the crowd, you will be very rich. You don’t have to be very bright.”
“It does not take the brain. It takes nature.”
All of this doubles as excellent life advice, because many of their investments make Maxims:
“It is good to learn from your mistakes. It is better to learn from other people’s mistakes.”
“Which pond you jump into, it is more important how well you float.”
“You only have to do very few things in your life until you do too much things wrong.”
Buffett credited his amazing investment returns only for a dozen “really good decisions”, which he has created – an average every five years.
And he lived his life in the same way: The sixth-time rich man in the world still lives in the house he bought in $ 31,500 in 1958.
Conversely, his investment process was as simple as he led life: he does not build a financial model, for example, he just reads a lot.
“I probably read five to six hours a day … I read five daily newspapers. I read the appropriate number of magazines. I read 10-cake. I read the annual report.”
Mixed knowledge earned from all that reading, he explained, allowed him to bounce when he came with an unusual occasion.
“If someone tells me about an investment … then I usually know in two or three minutes what I am interested.”
In 2003, for example, he bought homebuilder Clayton Holmes (not only stock, the entire company) for $ 1.7 billion after reading his SEC filing and talking to the management (he did not visit the company until he was owned by it).
In 2008, he turned down the request to save the Lehman Brothers only because its financial statements were very complex (a huge red flag for them).
At the height of the latter financial crisis, he inserted $ 5 billion in Goldman Sachs and a few hours of conversation conditions after a phone call with his CEO.
The results, of course, speak for themselves: from 1965 to 2024, Berkshire Hathaway shares increased by more than 5,500,000%-one gravitational-wide annual return exceeded about 20%. 59 Year.
Comparatively, the total return of the S&P 500 index in that period was “just” 39,000%.
“Buffett’s return is neither luck nor magic,” Academic study Found, “But, rather, rewarded for the use of joint leverage with focus on cheap, safe, quality stock.”
Recently, however, Buffett has not found several stocks that are cheap, safe and enough to avail quality – for the first time in two decades, Berkshire Hathaway has more cash than listed equity.
This is not because Buffett is worried about what politics or tariff can mean for the stock market: “I never try to profit from the stock market,” he said.
But his failure to find good businesses at reasonable prices probably tells us something about the market.
Buffet Acolit Chris Bloomstron Estimate Currently with valuations and profit margins, investors in S&P 500 should expect the return of “not more than 1.1% per year for the next decade”.
If so, going into retirement with a record amount can lead to the thirteenth “really good decision” in history as Warren Buffett has created – and an educational one, one, on it.
“Investment is the world’s largest business because you never have to swing,” Buffett explains in typical buffet fashion. “All day you wait for the pitch of your choice; then, when the fielders are sleeping, you move and kill it.”
With the rebound of the market in the last one month, it seems that he will probably not look at any more fat pitches before retiring at the end of the year – despite all the bad news on the tariff.
But I am sure he will tell young investors that there will be much to look forward: “In the long term, the news of the stock market will be good.”
Let’s check the chart.
Stocks are up, but estimates are below:
It is convinced that the stock is back where they were before “liberation day”, but this does not mean that nothing has happened. According to Torsten Slok, the earnings estimate is quite low, which means the stock is quite expensive.
Stock market vs betting market:
Polymarket odds Suggest that an American recession is still not slightly more likely, but BCA research estimates that the stock market is now pricing at just 25% likely.
Economists are being priced in stagflation:
Torrestain slok Note Increased inflation and falling GDP estimates indicate that stagflation is coming. On fomc Kolhu This week, Fed Chair Zerome Powell agreed: “If there is a big increase in the tariffs declared, they are likely to increase inflation, recession in economic growth and increase unemployment.”
This can be worse than this:
Goldman Sachs analysts estimate that tariffs will increase inflation by 2.25%.
Business policy is less uncertain, I think:
The markets are asked to hate uncertainty, and despite all the contradictory headlines, Trade policy uncertainty index Below is – so perhaps that’s why stocks are above?
The actual business is also down:
Container booking from China to America is 49% below the year. President Trump Said This is a good thing because any business means “we lose less money.” But he wants Some? Trade level with China – that Posted This morning the current 145% tariff rate may fall by 80% and suggested that he is leaving it with Treasury Secretary Scott Besant, when he meets China at the end of this week in Switzerland.
Business with China has been good for us:
Jason Furman Note American wages increased rapidly in 24 years after China joined the WTO (orange bars) 24 years ago (blue lines). Most surprisingly, wage growth has been far more justified than globalization in those two decades, as they were earlier.
Business with China has been good for us (2):
Jeremy Horpedhal Digs slightly deeply and finds that the real (ie, inflation adjusted) income for high school graduates without college degree is more in at least 50 years (and I probably guess anytime, but the fed data does not go anywhere). This is getting even better, this week Wall Street Journal Informed About a high school junior, which offered an annual $ 70,000 job as his school offers welding classes.
Companies are still buying:
Theft Reports This year US companies are on track to buy more than $ 1 trillion this year.
Retail investors are still buying:
Data from the Bank of America suggests that its private customers excitedly bought tariffs in equity.
Warren Buffett would appreciate his long -term optimism, if not his short -term time.
A luxurious weekend, long -term readers.
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