Margin of safety
The oracle of Omaha speaks
Good morning, value investors. This is your Stock Market Rundown for May 7th, 2024. Thanks for joining me. Let’s dig in:
TODAY’S TOP STORY: FOR BUFFETT, CASH IS KING
It’s the Coachella of capitalism, the Formula 1 of finance. This past weekend, Omaha, Nebraska was host to investing’s biggest shindig of the year: Berkshire Hathaway’s annual meeting.
Annual meetings of public companies are usually a snooze, but the Berkshire meeting is more like a festival—for people who love poring through securities filings on Saturday night, anyway. Forty thousand of the value-investing faithful show up to enjoy the wit and wisdom of Warren Buffett.
This particular meetup was poignant, as it was Buffett’s first time chairing it without Charlie Munger. Munger was the second-in-command at Berkshire for five decades, until his death last year at age 99. (Buffett’s designated successor Greg Abel, a relative youngster of 61, took Munger’s place riding shotgun onstage.)
So what’s Buffett’s forecast for the US economy? Well, brace yourself to cough up more of your income to Uncle Sam every year: Buffet predicts the government will raise taxes to battle widening fiscal deficits.
And in a sure sign that Buffett views stock valuations as stretched, he told meeting attendees he’s cool with holding a big cash position right now, because it positions him to snap up bargains when the market dips.
Spry as ever, Buffett told the crowd he has no plans to retire: “If I'm lucky, I can go on for six or seven years, or it might end tomorrow." Why quit when you’re having this much fun?
SO WHAT ELSE IS GOING ON?
Busted hips and knees equal dollar signs for Zimmer Biomet. The medical device company beat estimates on demand for its devices used in joint replacements.
Taylor Swift sings a lot about breakups, but she does have one happy long-term relationship—with her record label. Universal Music Group reported an earnings beat, partly thanks to Swift’s mega-successful Eras tour.
Defense company Huntington Ingalls had a strong quarter thanks to demand for the aircraft carriers it builds for the Navy. Wonder what the commission is on selling one of those things.
You might want to keep your resume up-to-date: job openings have fallen to a three-year low. The job market is like a game of musical chairs, except that if you lose, you can’t pay rent.
That's all for now, esteemed colleagues. Catch you back here tomorrow morning. Yours in capitalism, The Axe
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