From Birch Gold Group
When the vice chairman of one of the world’s largest investment firms and one of the most well-known names on Wall Street both “throw up their hands” in a time of economic crisis, it’s a good idea to pay close attention.
We’re referring to Charlie Munger and Warren Buffett of Berkshire Hathaway, both of whom seem baffled by the current state of affairs. Says Munger:
I would say basically we’re like the captain of a ship when the worst typhoon that’s ever happened comes… We just want to get through the typhoon, and we’d rather come out of it with a whole lot of liquidity.
Wolf Richter commented on Munger’s doubt, writing:
There is something refreshing during these insane times when a guy in his mid-90s who has seen it all and has been successful at navigating it, and who, during the last Financial Crisis, was buying stocks and entire companies hand over-fist, now says that he has never seen anything like this before, and that he doesn’t know what to do except to sit tight.
It remains to be seen whether Buffett’s promise from his letter to shareholders in 2019 – that Berkshire will “forever remain a financial fortress” – will be broken in 2020.
But at least one of Buffett’s favorite investments, See’s Candies, furloughed its retail workers in early April.
Another example of the uncertainty Buffett and Munger seem to be monitoring lies in the airline industry.
On March 13, Buffett stated, “I won’t be selling airline stocks” — even though airline stock prices had dropped about 27.5% in just two weeks. Buffett’s initial statement caused Delta’s stock to rise temporarily.
But three weeks later, on April 3, Berkshire ended up selling 13 million shares of Delta and 2.3 million shares of Southwest for about $389 million.
You can see below how poorly the stocks of the top 7 airlines have fared:
The airlines have already received $2.9 billion in bailout-style funds from the U.S. Treasury. And with two major figures from one of the world’s largest investment firms reacting to the recent market whipsawing by “sitting tight,” an important question still remains…
How Low Could the Economy Plunge?
Somewhat frighteningly, Munger doesn’t seem to have a good answer to this question:
Nobody in America has ever seen anything else like this… This thing is different. Everybody talks as if they know what’s going to happen, and nobody knows what’s going to happen.
A weekly index of ten economic growth indicators, published by the New York Federal Reserve, doesn’t inspire confidence. In fact, the April 23 update reveals GDP decline that’s three times worse than 2009:
According to another article on WolfStreet.com, unemployment seems to be following a similar trend, “pointing to an increase of around 25-30 million unemployed, compared to an increase of around 10 million unemployed during the Great Recession.”
And if all of this is merely the initial plunge, it is hard to fathom what something “worse” could look like.
If You Want to “Sit Tight” Like Buffett – Consider This
When uncertainty strikes, like the economic “typhoon” Buffett and Munger refer to, physical assets like gold and silver tend to do well.
So if you take this opportunity to examine your savings, you may also want to consider diversifying into those.
After 8 long years of ultra-loose monetary policy from the Federal Reserve, it’s no secret that inflation is primed to soar. If your IRA or 401(k) is exposed to this threat, it’s critical to act now! That’s why thousands of Americans are moving their retirement into a Gold IRA. Learn how you can too with a free info kit on gold from Birch Gold Group. It reveals the little-known IRS Tax Law to move your IRA or 401(k) into gold. Click here to get your free Info Kit on Gold.
It is my sincere desire to provide readers of this site with the best unbiased information available, and a forum where it can be discussed openly, as our Founders intended. But it is not easy nor inexpensive to do so, especially when those who wish to prevent us from making the truth known, attack us without mercy on all fronts on a daily basis. So each time you visit the site, I would ask that you consider the value that you receive and have received from The Burning Platform and the community of which you are a vital part. I can't do it all alone, and I need your help and support to keep it alive. Please consider contributing an amount commensurate to the value that you receive from this site and community, or even by becoming a sustaining supporter through periodic contributions. [Burning Platform LLC - PO Box 1520 Kulpsville, PA 19443] or Paypal
-----------------------------------------------------
To donate via Stripe, click here.
-----------------------------------------------------
Use promo code ILMF2, and save up to 66% on all MyPillow purchases. (The Burning Platform benefits when you use this promo code.)
A captain of ship probably isn’t looking for liquidity during a typhoon.
Poor metaphor, wouldn’t you say?
I would say the captain of the ship is trying to avoid the liquidity, ie sinking
Nope, he most likely wanting fewer holes and larger pumps. Better yet, a sheltered bay to lay over in.
Yes it’s a poor metaphor, those two have a wicked sense of syntax and you would not expect that poor wording. I have to take it at face value, he meant that they will look to cash out like they did with the airlines.
Hardy, you might not believe me but I’m sure I was not alone thinking that the bubbles they were blowing in the oughties would one day lead to this, they were counting on printing money forever, we were counting on (if not Jubilee) inevitable inflation.
The small business entrepreneurs that got burned by the gov’t fatwa to shut down and don’t have the funds to restart aren’t likely to stay in the entrepreneurial frame of mind knowing that it’s too risky. Some new gov’t edict from on high could easily do it again.
Fool me once, shame on you, fool me twice, shame on me.
Given that the media is already preparing everyone for a 2nd, 3rd, etc wave of this virus and that the medical establishment is claiming that there’s no automatic immunity granted to people that have survived it means that there’s a plan to keep shutting things down as the overlords see fit to do. The population of mostly frightened sheep will comply and even if businesses want to stay open their customers will abandon them again and again and again.
You’d have to be nuts to even try to restart unless you have free money backing you up and we know that only the large corporations are getting it.
This situation is the perfect ploy to force everyone to comply because the force is market driven due to fear. You have to give the bastards credit for being supremely evil and damned smart about their plans.
“Fool me once, shame on you, fool me twice, shame on me.”
-Solutions Are Obvious
Um, not according to The Decider:
>>>You have to give the bastards credit for being supremely evil and damned smart….
Indeed.
The implied equation has become “large corporate interest, too big too fail” = “free market” = “western civilization”. It’s amazing, it’s perverted… but it worked.
Doc Pangloss explained that the lack of information can lead to anxiety and anxiety can lead to neurosis.
When you don’t know where you are going, it can make you anxious. The only way to be secure is to search out eternal salvation or eternal damnation. For those who have made a pact with the evil, there is no anxiety or self-doubt, they follow one law – do what thou wilt. Evil multiplies and prospers. How is it the richest nation on earth is also the most morally bankrupt?
—————–
…10Then he told me, “Do not seal up the words of prophecy in this book, because the time is near. 11Let the unrighteous continue to be unrighteous, and the vile continue to be vile; let the righteous continue to practice righteousness, and the holy continue to be holy.”
Bunger (Buffet-Munger) have already given a their views on how their money should be deployed. Their assets don’t include significant gold or silver hedges but if there’s a sweet, insider deal on cheap bank warrants, hey … they’re on it.
Two stock manipulators/speculators who are most certainly “in on it.”
If they don’t own them already, they could purchase outright, for a relatively small cash outlay, some very well placed precious metal mining concerns.
Typically prudent, patient Berkshire. Why try to catch falling knives? When it’s over and it’s clear who the survivors are, they have at last report $138 Billion in cash with which to play. Also enough clout to get the “Free Bubble Up” at the FED Window. I hold it and hope to hold a lot more of it as time goes on.