Spencer Jakab
Appearances
The Journal.
Does Warren Buffett Know Something We Don’t?
Scratching their heads. Because why is the guy who likes to invest forever holding on to $325 billion in cash?
The Journal.
Does Warren Buffett Know Something We Don’t?
Welcome to The Journal, our show about money, business, and power. I'm Ryan Knutson. It's Wednesday, November 13th. Coming up on the show, why is Warren Buffett hoarding all this cash?
The Journal.
Does Warren Buffett Know Something We Don’t?
Why do people care so much about Warren Buffett? Why is he such a big deal as an investor?
The Journal.
Does Warren Buffett Know Something We Don’t?
Buffett started investing when he was a kid. He eventually bought a rundown textile manufacturing company called Berkshire Hathaway, and he used it to buy other companies and invest in the stock market.
The Journal.
Does Warren Buffett Know Something We Don’t?
Over the decades, the key to Buffett's success has been to, one, pick the right companies to invest in, and then, two, hold on to those investments for a long time and let the magic of compound interest do the rest.
The Journal.
Does Warren Buffett Know Something We Don’t?
But recently, Buffett, who's 94 years old, has been getting attention for doing something that's totally out of character. He's selling stocks and hoarding giant piles of cash.
The Journal.
Does Warren Buffett Know Something We Don’t?
Since 1965, when Buffett took over Berkshire Hathaway, the S&P 500 has made 10% a year on average. Buffett, on the other hand, has made 20% a year on average. And thanks to the power of compound interest, that difference is way bigger than it sounds.
The Journal.
Does Warren Buffett Know Something We Don’t?
Here's Buffett talking about compound interest in a documentary. It's a pretty simple concept, but over time, it accomplishes extraordinary things. The longer you hold onto a stock, the more time that compound interest can work, which is why it's so surprising that Buffett has been selling stock from big companies like Apple and Bank of America.
The Journal.
Does Warren Buffett Know Something We Don’t?
Buffett hasn't said exactly why he's doing it. Is it possible that his decision to take this money out of the stock market has something to do with just where he is in his own life? I mean, he's 94 years old. Obviously nobody lives forever. Could he be thinking about, you know, could that be a factor in what he's doing right now?
The Journal.
Does Warren Buffett Know Something We Don’t?
Do you think that Warren Buffett's cash hoarding might have something to do with the presidential election and who he thought might win?
The Journal.
Does Warren Buffett Know Something We Don’t?
But even though Buffett isn't saying exactly why he's doing this, Spencer says his track record offers some clues. Back in the 1960s, Buffett sold off a lot of stock when he thought the market was overvalued. In the 1990s, Buffett also became cautious just before the tech bubble burst, and he sold stocks again just before the 2008 financial crisis. Notice a pattern there?
The Journal.
Does Warren Buffett Know Something We Don’t?
So if the only times he's pulled out of the market in the past is in the lead up to a recession or a market downturn, does that mean he thinks we might be headed for another one?
The Journal.
Does Warren Buffett Know Something We Don’t?
But even if there isn't a recession, some Wall Street analysts say the stock market is overpriced, which might mean growth could slow down significantly over the next few years.
The Journal.
Does Warren Buffett Know Something We Don’t?
Warren Buffett is probably the most famous investor alive. His company, Berkshire Hathaway, is worth more than a trillion dollars. And the way he's made all that money is by playing the long game. When he buys shares of a company, he tends to stay invested. He once said that his favorite holding period for a stock is forever.
The Journal.
Does Warren Buffett Know Something We Don’t?
By comparison, the S&P has averaged 13% over the past decade.
The Journal.
Does Warren Buffett Know Something We Don’t?
Wow. Like, if you were to stack up all these $1 bills, $325 billion $1 bills, like, does that get you, like, close to the moon? Like, can you paper over the entire planet Earth with all this money?
The Journal.
Does Warren Buffett Know Something We Don’t?
So if his money isn't in the stock market, what is Buffett doing with all that cash? That's next.
The Journal.
Does Warren Buffett Know Something We Don’t?
where does one even keep $325 billion? I mean, you're obviously not stuffing it in a mattress, but like spreading it out over different bank accounts, like where does he actually put all that money?
The Journal.
Does Warren Buffett Know Something We Don’t?
Because this is the U.S. government. You're not likely to lose your money because the U.S. government has a history of always paying its bills. Right.
The Journal.
Does Warren Buffett Know Something We Don’t?
U.S. Treasury bills are earning Buffett roughly 4.5% interest, but it's a far cry from the 20% he's made annually on average during his career. I mean, 4.5% or so on $325 billion, that's still a lot of money coming in.
The Journal.
Does Warren Buffett Know Something We Don’t?
But Buffett doesn't seem to want to settle for that.
The Journal.
Does Warren Buffett Know Something We Don’t?
The Perfect Elephant is a big, healthy company that he can buy for a decent price. The problem is that right now, there doesn't seem to be a lot of good options.
The Journal.
Does Warren Buffett Know Something We Don’t?
What does it mean if Warren Buffett is looking out at the world of investing opportunities and says, nothing out here looks good to me?
The Journal.
Does Warren Buffett Know Something We Don’t?
So are you sort of saying that Warren Buffett has gotten too big for his buy and hold forever strategy to work anymore?
The Journal.
Does Warren Buffett Know Something We Don’t?
Right, diving off a dive board into a swimming pool of coins, which by the way, you would hurt yourself. It would hurt. You wouldn't dive in.
The Journal.
Does Warren Buffett Know Something We Don’t?
So what's the takeaway, do you think, for everyday investors like the rest of us?
The Journal.
Does Warren Buffett Know Something We Don’t?
That's all for today, Wednesday, November 13th. The Journal is a co-production of Spotify and The Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.
WSJ What’s News
Inside the U.S.-Ukraine Mineral-Rights Deal
Ja, und es könnte ein Wachstum sein, weil es an einem Zeitpunkt kommt, als US-Kosten sehr teuer sind. Und das wurde ein bisschen übersteuert von Trumps Re-Election. Du hattest den Trump-Trad, Trump-Foria, was auch immer du es nennen möchtest. Und in den letzten paar Tagen ist es in den Rückgang gewechselt.
WSJ What’s News
Inside the U.S.-Ukraine Mineral-Rights Deal
Die Korrelation zwischen den beiden ist niedriger als es war, nur vielleicht 0,3 Prozent der Zeit. Aber ich denke, das Interessanteste ist, wie teuer die US-Märkte heute immer noch sind, besonders diese großen Wachstumsmärkte, die den Markt geführt haben, wie Nvidia, Microsoft, Google, Amazon, Apple, etc., etc., als wirklich alles in der Welt.
WSJ What’s News
Inside the U.S.-Ukraine Mineral-Rights Deal
Yeah, nothing good. First of all, if you look at how expensive they are relative to all of their history, developed market large growth, which was dominated by US companies, is at its 98th percentile. That means it has only been more expensive 2% of the time in history. Non-US large value stocks haben nur 2% der Zeit günstiger gewesen.
WSJ What’s News
Inside the U.S.-Ukraine Mineral-Rights Deal
Das ist also ein Rekordspread zwischen diesen beiden Arten von Stocks. Nun, du kannst dir einige dieser Firmen wie Nestlé oder BP oder Shell oder Roche in der Schweiz anschauen und sagen, dass sie langsamer wachsen. Aber auch wenn sie langsamer wachsen, sind sie so günstiger, dass ihr Perspektivaufwand viel höher ist.
WSJ What’s News
Inside the U.S.-Ukraine Mineral-Rights Deal
Und die Zahlen, die sie herausgegeben haben, sind, dass non-US-Developed-Market-Large-Value-Stocks ca. 10% pro Jahr über die nächste Dekade zurückkehren könnten, während US-Large-Growth-Stocks ca. 1,8% pro Jahr zurückkehren könnten, was nach der Inflation negativ ist. Also ist es eine gigantische Unterschiede.
WSJ What’s News
Inside the U.S.-Ukraine Mineral-Rights Deal
Und ich würde nur sagen, dass Forschungs-Affiliate nur für ihre projizierten Rechnungen in den letzten 35 Jahren schauen. Also, wirklich seit der Computer-Ära. Also, wenn du sagst, du kannst die alte Ära technologisch nicht vergleichen, wir haben Daten, die zurückgehen in die 1870er-Jahre für US-Stocke. Nein, ich glaube, du kannst es wahrscheinlich nicht.
WSJ What’s News
Inside the U.S.-Ukraine Mineral-Rights Deal
Aber sie geben dir den Vorteil der Angst, wenn du das sagst. Und sie sagen, ja, wir nehmen nur die letzten 35 Jahre. Es ist immer noch wahr.
WSJ What’s News
Inside the U.S.-Ukraine Mineral-Rights Deal
Nothing is guaranteed. I mean, yeah, I would say that valuation is really interesting. If you're just reading or hearing about it today, that there's this gigantic gap in valuation, it might seem like something you should rush out and do and change your portfolio. And I would just caution that had we had this conversation a year ago.
WSJ What’s News
Inside the U.S.-Ukraine Mineral-Rights Deal
Es war nicht so extrem, aber es war noch ein ziemlich großer Wunsch, ein Jahr zuvor. Und du würdest dich kicken, weil US-Weltkosten letztes Jahr wirklich gut gemacht haben und europäische Wertkosten nur so und so gemacht haben. Also hättest du das auch nicht gemacht. Du weißt, Wertung ist kein Markttiming-Tool. Es funktioniert in der Länge, es funktioniert nicht in der Kürze.
WSJ What’s News
Inside the U.S.-Ukraine Mineral-Rights Deal
Wenn du versuchst, einen Doppelpunkt in den Markt zu finden, dann ist das nicht für dich. Wenn du ein Investor bist, anstatt ein Spekulator, also du legst Geld weg, Geld, das du in 10, 20 Jahren benötigst, dann solltest du darauf achten, weil es eine gigantische Unterschiede gibt, in Bezug auf die Anzahl der Geld, die du haben könntest, wenn Forschungs-Affiliaten sogar knapp zu korrekt sind.
WSJ What’s News
U.S. Stocks Soar as President Trump Pauses Some Tariffs
Yeah, that's putting it mildly. It was news that they were hankering for, and the reaction was the most violent reaction, positive reaction that I've ever seen in stock markets.
WSJ What’s News
U.S. Stocks Soar as President Trump Pauses Some Tariffs
We're down three point something percent since the Liberation Day announcement. We're down less than 10% from the peak. So we never actually closed in a bear market 20% from the peak. To be down 3.8%, that's fair. That's actually getting off very mildly. So when we resume trading, we could see more declines when people have time to think about it.
WSJ What’s News
U.S. Stocks Soar as President Trump Pauses Some Tariffs
The sort of reaction that we saw today is exaggerated by how people are positioned because people got very, very defensive. And so when you have this kind of sudden reversal, this piece of news that's a bombshell like this, the announcement that tariffs would be suspended for a while, it can elicit a reaction that's in excess of the economic benefit of the news itself.
WSJ What’s News
U.S. Stocks Soar as President Trump Pauses Some Tariffs
When smoke clears tomorrow, not like we've had in the last few days, we might resume a downward trend because this all has been a hit to the economy, not just the tariffs themselves, but the chaos and the uncertainty surrounding the tariffs.
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
And then GE Aerospace and Boeing were both more specific, but they also have larger commercial footprints. Boeing, for example, said that about 80% of its commercial suppliers and about 10% of those for defense are outside the U.S. and could be affected by tariffs. Can you just give us some picture of how much you think they'll be hit and is anyone really totally insulated in this world?
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
And if I look at this business, if I look at defense and aerospace, commercial aviation, those are two rare industries where the U.S. actually has a manufactured good surplus with other countries. There are not a lot of businesses where you can say that about. We have a very large goods trade deficit with the rest of the world.
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
They're understandably cautious, the executives of these companies, sort of talking about whether or not that's in danger because nonstop tariff headlines and – the fact that we've antagonized some of our closest trading partners and allies. But have you heard anything?
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
Are they concerned that they're burning bridges and that customers may basically not trust the US or not want to deal as much with them as they have in the past?
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
Listening to some of the calls and reading the transcripts of the calls, they're talking about the next generation of a lot of these fire aircrafts and missiles and air defense systems and things like that. These projects, they classically do run into cost overruns. Given all the cost cutting we have in Washington, are some of those projects in danger?
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
I know the F-35, for example, had massive cost overruns. And in order to just to make one of these things viable, you have to have foreign partners. You have to have a certain number of purchases of them abroad, at least for some of them.
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
It seems like it's, in some sense, it's a golden age if you're in the defense business, right?
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
Hey, listeners, it's April 29th. I'm Spencer Jacob for The Wall Street Journal, and this is What's News and Earnings, our look at the broad themes that stood out in the latest earnings season. We're four months into 2025, and it's a changed world.
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
And these companies, many of them have two legs to stand on. They have commercial side as well as the military side. Boeing has had its share of problems in the last few years. related to the commercial side of its business, the military and the space side were the relative strengths. Is that diversification good for those companies right now?
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
Is the nature of that business different? You had Northrop Grumman specifically saying, look, these contracts have – if there are additional costs that we didn't anticipate, those are built into them. You hear about the $900 hammers and things like that that the Pentagon buys.
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
Is it still that kind of gravy train or are they under stricter scrutiny in terms of being able to say our suppliers are charging us more for this material and now you're paying for it?
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
The United States, which has for decades been at the center of international trade and capital flows, and also the bulwark of security for the world's democracies, is pulling back sharply from both roles. Tariffs hurt most manufacturing businesses, of course, but some defense companies operate in a world where that affects them less.
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
Sharon, thanks so much. That was fascinating. Great insight into how this business works.
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
As Western democracies up spending for their own defense, how will that balance play out? First quarter earnings season for defense contractors gave us a mixed picture on how this all will play out for those companies. Sharon Turliff covers the business for The Journal and is here to help us understand.
WSJ What’s News
What’s News in Earnings: Defense Contractors Thrive in Uncertain World
Sharon, during their first quarter earnings calls, defense company executives gave different accounts of how tariffs could affect them. Northrop Grumman said that additional costs are built into their contracts, and so they weren't very concerned. General Dynamics said that they wouldn't answer questions about tariffs because of all the uncertainty.
WSJ What’s News
Why Wall Street Is Raising the Alarm Over U.S. Debt
It's a $9.4 billion package and $8.3 billion of that is foreign aid funding. The foreign aid portion includes funding for Das war eine der größten Verletzungen in den frühen Tagen von Doge. Und es gibt auch Zählungen auf Außen-Aid-Fundung für die Staatsbibliothek, sowie Zählungen auf Projekte in Afrika und Aids-Relief.
WSJ What’s News
Why Wall Street Is Raising the Alarm Over U.S. Debt
Das Paket würde auch über 1 Billion Dollar in Zählungen für die Corporation für öffentliche Broadcasting zählen. Das ist die Organisation, die Zählungen an NPR und PBS verteilt. This comes after Trump signed an executive order last month to defund public media. Both NPR and PBS filed lawsuits last week alleging that the executive order is unconstitutional and violates federal law.
WSJ What’s News
Why Wall Street Is Raising the Alarm Over U.S. Debt
So impoundment essentially means Trump would refuse to approve this funding approved by Congress. But there is a law called the Impoundment Act of 1974 that lets Congress review and overturn these cuts. But there is a separate method that has been proposed by Russ Vogt, the director of the White House Office of Management and Budget.
WSJ What’s News
Why Wall Street Is Raising the Alarm Over U.S. Debt
He suggested using something called pocket rescissions, which would What is the broader goal here? What does the administration see as the problem that it's addressing with these moves? A lot of Republicans in Congress have called rescissions a way to codify Doge cuts. So it's sort of a continuation of what Elon Musk has done in the Department of Government Efficiency over the past four months.
WSJ What’s News
Why Wall Street Is Raising the Alarm Over U.S. Debt
Rescissions is a way to balance that big package out. And this could also be a way to appease some fiscal conservatives in the Senate. So the timing of this is pretty interesting, that this is coming out as the Senate is working. Das war WSJ-Reporter Jasmine Lee.