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Language: en
You are in a bubble right now, Drew. The
AI bubble is going to burst.
>> Birkshshire Hathaway has the most cash
it ever has on hand. Is that like an
indicator that you know the most
successful investor is like, I'm going
to take a step back for a second.
>> He is sending you a signal that bad
things are going to happen to the stock
market in the short term. So, keep in
mind Warren Buffett's job is to yield an
annual return. He's got to think about
his shareholders. He is in every minute
detail of the stock market. And so you
will see over time he has pulled cash
out, put cash back in. The odds that
this is very similar to a 1999.com
bubble are extremely high. The catch is
you'd still make an unfathomable amount
of money if you just were diversified
across all the dot stocks in 1999, rode
out the bubble bursting and just let all
of it climb back up. And if you're a
dollarost averager, which I advise you
to be, then you would just be doing
that. Oh, look at everything's on
discount because over the last 200
years, 6.5% over inflation is what a
well diversified set of stocks has
yielded. I am not the person for day
traders to pay attention to. Go look at
all the quants and all those guys and if
you want to take that risk and you think
you're that smart, go for it. Yes,
Warren Buffett is telling you that
you're in for probably several years of
trauma and turmoil. But if you're
invested for 25 years, 50 years, 60
years, what does it matter? All of these
blips are going to come and go.
Understand the nature of the thing and
you will be fine. If you steer by
emotion, you are going to lose your
[ __ ] money. Warren Buffett is
stockpiling cash because he's not able
to find good investments or long-term
scale projects anymore.
>> Yep. I think right now that is a very
reasonable thing for somebody that has
to yield an annual return for
shareholders for sure. Now, just keep in
mind he has done this before. This might
be the time where he's done it. It's 20%
bigger than he's ever done it. But he's
done this many times before where he
doesn't think there's any deals in the
market. He sees instability here, there
somewhere. Just be careful. If you're
not Warren Buffett and you are not
spending every day reading shareholder
reports and all of that stuff, the odds
that you're able to do what he does and
get the returns that he's going to get
are zero. Far better to play the game
that's worked for 200 years for the
average person, which is just stay in
the market. Don't put money in there
that you need to touch in the next 25
years. Don't put your grocery money
there. Make sure that you have plenty of
money in cash. I keep years of money in
cash on hand because hey, who knows?
Now, I'm When you take it at a raw
dollar amount, the amount that I lose in
potential upside on having years worth
of cash at my lifestyle is a lot. But I
do it so that I don't have to worry. If
the economy went into a multi-year
recession, I I wouldn't even have to
think about it. but it gives me plenty
of time to react. So, I'm just saying I
think it is wise to put yourself in that
kind of position.
>> Buffett used to say that he never sells,
but now he's sold and holding cash. This
is a different behavior. Big signal to
everyone else that is being ignored.
>> Yep. Whenever somebody makes a
statement, myself included, what they
are saying is right now with the way
things are and the things that I know
now, this makes sense. But if you try to
pull something that he might have said
20 years ago and apply it to today, that
doesn't make any sense. He's not trying
to be dogmatic. He's trying to get a
return for shareholders. Once you
understand that, the man has to get an
annual return for shareholders. I don't
care how good of an investor you are.
You start doing three, four years of not
sufficient returns, especially when
other people are getting bigger returns,
people in your community are going to
turn against you. If you live in an
inflationary environment, you must find
a way to beat the punishing effects of
that inflation. If the stock market just
absolutely gets obliterated and banks
are folding, guess what they're going to
do? They're going to print more money.
And so if you have all of your money in
cash, you are [ __ ] There's no other
way to say it. Your money will literally
go to zero. Very bad things can happen.
And the thing that separates people is,
do you own assets or not? And you should
be mad as hell that you're being forced
to gamble in the stock market. But you
have to gamble because the reaction to
every bad thing in the market is going
to be to print money. When you really
just get to the raw mechanism of how
this works and why unfortunately
everybody is forced to gamble in the
stock market, you will understand like
black markets spring up for a reason. If
you really hyperinflate a currency, the
following would be brilliant. You buy a
whole bunch of freezers cuz now at least
your money is in a freezer and it's not
like the freezer has the value that the
freezer has. and then you go to the
grocery store and you buy a bunch of
things that you can freeze and then you
sell it to people and you change the
price every hour. That would be a
brilliant use of capital. What isn't a
brilliant use of capital is leaving it
in the bank is investing in assets when
you need the money right now. These are
all terrible [ __ ] ideas. If we
actually hyperinflate the US dollar, my
advice to people is not going to be,
hey, keep dollar cost averaging into the
stock market. It's going to be like,
okay, what can you do right now to make
sure that your family can eat? Buffett
is in a different place. He's going to
react differently because a he's got
asymmetric knowledge. He's also he's
like 170. So he's going to have a
different lens on life. He's already
trying to pass the baton to the next
person. So it's like all of that is
going to influence. It is a data point.
It is a data point to read. Well, it is
a data point that tells me the stock
market is not going to be a great place
to be in the short term.
>> We've got a counterargument. Tom, you're
missing the biggest piece. The yield
curve inversion. Buffett pulling
billions and asset prices at inflated
highs. These aren't random. They're the
classic setup for a crash. You say
invest in assets, but doing that before
what could be the worst crash in 90
years would be unreoverable. The yield
curve, Buffett's moves, and inflated
highs all point to one thing, a reset.
If what you are saying is you are better
off keeping your money in cash, staying
out of the stock market, waiting for it
to basically go to zero, you're calling
it a reset. all the companies washing
out and then we build back and so just
wait and see if that happens. Cool. We
have registered your advice. It is
[ __ ] terrible advice. My advice is
very simple. Don't put money into the
stock market that you need back in less
than 10 years for sure. Probably 25 is
the right way to think about it. If that
happens, money printer go burr so hard
so fast you will hyperinflate the
currency. It will be the death of
America as we know it. So, I don't know
what you're actually advising people to
do. Live below your means. You must be
in assets in an inflationary
environment. Don't put money in that you
need right away. Make sure that you
always have cash on hand. Be nimble
enough that if things really do go to
hell in a hand basket that you have a
plan. If America shows signs of collapse
like that, I'm on the first private
private flight to Abu Dhabi. It just is.
I'm going to Singapore. I'm going where
it's warm and no mosquitoes at like
that. Just there it is. If you think
this is all going to reset, guess where
the worst place in the known universe
would be? Cash.