Is waiting for a stock market crash to invest a viable strategy?

[tech/a]

Personally I have found that over the years methods with positive expectancy will get me out of and back into a portfolio without catastrophic damage to my investments.

 

[rolly1]

i noted that LIC CDM went to 100% cash in March 2020 , and started 'cherry-picking ' on the way into the recovery ( i hold CDM )

May I ask why you hold cdm they have been under performing their benchmark by 4.5% for the last 10 years?

 

[Value Hunter]

no he doesn’t, quite the opposite actually.

He actually admits there is some companies that he owns 100% of and hasn’t spoken to the management in years, besides a generic letter he writes once a year addressed to all his managers.

And the companies on the share market he owns he doesn’t really contact at all.

His modus operandi is to be hands off and not to get involved in the ordinary course of business but occasionally he will get involved/activist when things really go wrong. This is something retail investors cannot do and is a huge advantage he has.

 

[Value Collector]

His modus operandi is to be hands off and not to get involved in the ordinary course of business but occasionally he will get involved/activist when things really go wrong. This is something retail investors cannot do and is a huge advantage he has.

You mean like Salomon bros incident, yeah that’s a very rare incident, and one he would admit that he would not want to be involved in again.

But yeah my point is that he isn’t on any boards, and even in his younger years was on only a handful, and both him and Charlie admitted that their time on boards was a waste of time.

 

[Value Hunter]

You mean like Salomon bros incident, yeah that’s a very rare incident, and one he would admit that he would not want to be involved in again.

But yeah my point is that he isn’t on any boards, and even in his younger years was on only a handful, and both him and Charlie admitted that their time on boards was a waste of time.

Even for example in Net Jets Buffett forcefully replaced a few CEOs and at Berkshire Energy he pushed out Dave Sokol for ethical breaches. Yes I agree its quite rare. And yes those were wholly owned subsidiaries. But the fact that remains that in certain situations he can do that sort of thing when absolutely necessary and it is an important advantage over retail investors.

 

[Value Collector]

Even for example in Net Jets Buffett forcefully replaced a few CEOs and at Berkshire Energy he pushed out Dave Sokol for ethical breaches. Yes I agree its quite rare. And yes those were wholly owned subsidiaries. But the fact that remains that in certain situations he can do that sort of thing when absolutely necessary and it is an important advantage over retail investors.

Yeah of course, that’s his job.

But going back to div’s original claim that Buffett seeks to get into the board and control the companies he owns shares in, that is obviously not true.

 

[Value Hunter]

But going back to div’s original claim that Buffett seeks to get into the board and control the companies he owns shares in, that is obviously not true.

I agree with what you are saying that doesn't seek to do it as an intentional strategy for his marketable securities purchases but he can do it in some cases if push comes to shove which I think we both agree on.

 

[divs4ever]

May I ask why you hold cdm they have been under performing their benchmark by 4.5% for the last 10 years?

but when we ( CDM and i ) both buy the same stock we do the polar opposites and still make money on it

and that under-performance has given me multiple top-up opportunities ( some which i have taken )

they also take short positions and invest in international markets ( like the US ) things i choose not to do personally , aswell as liquidate the portfolio when they consider it wise ( like March 2020 ) whereas i had cash on the side-lines and increased selected holdings and snatched the odd bargain

LICs like this score a major win now and again that will elude stable LICs like CAM and BKI , and CDM has a nice reserve of divs. to smooth out the rough patches

 

[divs4ever]

You mean like Salomon bros incident, yeah that’s a very rare incident, and one he would admit that he would not want to be involved in again.

But yeah my point is that he isn’t on any boards, and even in his younger years was on only a handful, and both him and Charlie admitted that their time on boards was a waste of time.

i understood that in recent years they selected a director ( or more ) to watch and push for changes that were needed

 

[Value Collector]

i understood that in recent years they selected a director ( or more ) to watch and push for changes that were needed

Not in any situation I am aware of.

They are not activist investors, if they felt there needed to be big changes, I don’t think they would be buying in.

There head office is famously small staffed, only 24 people work at Berkshire Hathaway corporate. He doesn’t really have the man power to be sending people off to board roles.

He basically has a couple of secretaries, some accounting people, a bond trader, and a few other people.

 

[divs4ever]

Not in any situation I am aware of.

They are not activist investors, if they felt there needed to be big changes, I don’t think they would be buying in.

Warren used to buy when there was blood in the street , and would offer big cash injections buying shares, preference shares and warrants or a mix depending on the deal , now most times preference shares don't get voting rights until they are converted .

chances are several companies Warren had bought into were great companies at the time by run by idiots , ,,,, maybe 'activist ' in the old sense , but not the current trend for activist ( social agendas , climate agendas , etc etc. ) more the old 'this is how you get your books in order ' style

 

[Value Collector]

Warren used to buy when there was blood in the street , and would offer big cash injections buying shares, preference shares and warrants or a mix depending on the deal , now most times preference shares don't get voting rights until they are converted .

chances are several companies Warren had bought into were great companies at the time by run by idiots , ,,,, maybe 'activist ' in the old sense , but not the current trend for activist ( social agendas , climate agendas , etc etc. ) more the old 'this is how you get your books in order ' style

Yeah, you are talking about during the GFC he did a couple of big deals involving cash injections, basically operating as lender of last resort in some cases. We got about 10% interest plus warrants that gave him upside exposure to share price recovery.

He has also been a silent partner in deals such as when 3G capital took Heinz private, it was a 50/50 deal, but he left all the management to 3G capital.

He also loaned a bunch of cash to help an oil company take over anardarco (? I think it was).

So he definitely does big deals, but he is t ever actively involved in running things. (Except for the Salomon blow up, which he hated and said he was counting the days till he could leave)

 

[divs4ever]

Yeah, you are talking about during the GFC he did a couple of big deals involving cash injections, basically operating as lender of last resort in some cases. We got about 10% interest plus warrants that gave him upside exposure to share price recovery.

and given his ( Berkshire's ) level of cash i would expect him to be ready for those sort of moves again

is the next downturn does anything to redress the excessive valuations in the market currently

i call 'a crash ' as a drop of more than 20% and some pundits are calling for a drop of more than 40%

so should Warren still be making active decisions at Berkshire at the time , that is what i think he is ready for ( rather than a slow return to rational valuations )

 

[TimeISmoney]

It always happens when everyone least expects it, I'm speculating it's going to go bear or bull but not sideways when Trump takes over.

Trump's announcement when he comes into office has hit mainstream media with 10% tariffs on China and 25% on all goods from Mexico and Canada.

ASX in the red, Aussie dollar drops on Trump tariff threat — as it happened

Local stocks reversed and the Australian dollar fell near a seven-month low as the incoming US president pledged a 25 per cent tariff on all products from Mexico and Canada. Here's how the trading day unfolded on the ABC News live markets blog.

www.abc.net.au

 

[divs4ever]

25% on all goods from Mexico and Canada.

that will shake some confidence it basically abandons NAFTA , and might make other US trading partners rather nervous ( that they will be next )

but remember tariffs end up being a tax on consumers

 

[TimeISmoney]

that will shake some confidence it basically abandons NAFTA , and might make other US trading partners rather nervous ( that they will be next )

but remember tariffs end up being a tax on consumers

Trump hasn't even waited until new manufacturing businesses are up and running.

Other countries will counteract I would imagine, like China banning rare earth exports.

I can't see US inflation falling really fast.

I bet China is laughing in one way, their populace was poor to start with and it's not hard going back to that type of life if you've lived it but on the other hand for the US populace it's a different story.

As for the stock markets it's got to be one of the most nervous times in history.

 

[divs4ever]

Trump hasn't even waited until new manufacturing businesses are up and running.

Other countries will counteract I would imagine, like China banning rare earth exports.

I can't see US inflation falling really fast.

I bet China is laughing in one way, their populace was poor to start with and it's not hard going back to that type of life if you've lived it but on the other hand for the US populace it's a different story.

As for the stock markets it's got to be one of the most nervous times in history.

well i am on edge , but then , i have always been the hungry minnow looking for an angle , i don't have a big belly , but i do like tasty

have i got it right this time , March 2020 was more an accidental success ( for me ) i would like things go more to plan , this time

China and Russia will restrict rare earths simply because they are essential for many of the weapons that are likely to be used against them

it won't stop a work-around ( for the West ) but it will cause delays and cost blow-outs .

now the West has floated the Ukraine rare earths ' narrative expect China to give Russia very discreet , but solid support , just in case the US isn't lying this time .

can the US function using cheap substitutes ( like Russia excels at )

the most important thing Trump needs to do is clean out the bottle-necks in America ( or saboteurs in a real war will cause chaos )

 

[TimeISmoney]

25% tariffs on Canadian imports, Trump's got to be kidding himself or he's going to use it as leverage to get exports cheaper.

 

[divs4ever]

25% tariffs on Canadian imports, Trump's got to be kidding himself or he's going to use it as leverage to get exports cheaper.

well he has a reputation of a deal-maker , and he has wrangled some big ones


but Canada choose the US over China , this is what they wanted

will be interesting to see what Mexico does , they had dreams of a Pan/Latin American trading bloc , maybe Mexico has viable options

 

[Value Collector]

Trump's announcement when he comes into office has hit mainstream media with 10% tariffs on China and 25% on all goods from Mexico and Canada.

ASX in the red, Aussie dollar drops on Trump tariff threat — as it happened

Local stocks reversed and the Australian dollar fell near a seven-month low as the incoming US president pledged a 25 per cent tariff on all products from Mexico and Canada. Here's how the trading day unfolded on the ABC News live markets blog.

www.abc.net.au

View attachment 188496

It’s a silly move in my opinion, when we are escalating the war in Ukraine, and hoping China stays out of it, we are giving them less reason to want to keep us happy.