In my last article, “The Bears Have it Right: Economy went Polar Opposite of Bullish Predictions,” I laid out my first prediction for 2019 — a recession by summer. I don’t want the following revelations and facts that I have since come across to get lost in comments I recently posted to that article, so I’m bringing them all together here.
How bad was 2018?
The Wall Street Journal just said it was “one of Buffett’s worst years ever.“
For the full year, Berkshire Hathaway’s earnings were down 90% from $45 billion the previous year. Their biggest hit came from a $25 billion loss in the fourth quarter.Interesting that the fourth quarter hit the world’s most famous investor that hard because that is the very quarter I said would be the worst of all in the stock-market crash of 2018 (which I believe is ongoing by the way; more on that next).
For anyone who still thinks the stock market’s plunge at the end of 2018 was not already a significant market crash, regardless of what follows, I present you this evidence: The Wall Street Journal says that for the world’s greatest investor, it resulted in his worst year EVER! (And he’s a very old man.)
Next, consider that Buffet’s worst year was also one of the biggest years for massive corporate tax breaks, which fueled an epic boost to earnings (calculated after taxes) and to stock buybacks (which even Buffet engaged in), and consider that Warren Buffet is widely regarded as the shrewdest safest-betting billionaire on the planet, known for never having a bad year even if he does from time to time have a few bad investments.
And then consider that Buffet is also refusing to invest in the present market, even in spite of the present rally. Maybe even because of it. He is sitting on a massive cash pile of more than $100 billion, mostly in treasury bills, which he says he cannot wait to spend; and, yet, he is waiting for an opportunity to invest because he believes this market is overpriced and still has more falling ahead.
Read the rest here: The Great Recession