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Welcome back everyone, We have 
an exciting day today. 

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We've had one of the worst stock
market sell offs this year. 

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Right now the Dow Jones is down 
-2.2%, the S&P 500 is down 

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2.54%, and the QQ, the NASDAQ is
down 2.6%. 

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Now these are big draw downs and
it's not even the worst of 

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today. 
It was worse just a couple hours

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ago. 
So we're having a bit of a 

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comeback, but it's still a 
really bad day. 

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If we look at the map overall, 
the heat map here shows across 

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the board we're deeply in the 
red. 

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We have a lot of the big leaders
like NVIDIA trading down 6%, 

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Apple down 4%, we have Google 
down 2%, Amazon down 3%, and so 

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on. 
You look anywhere in the market 

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and most likely it's deeply in 
the red. 

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And what is causing the sell off
today? 

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Well, there's a couple different
factors. 

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There's talks of an upcoming 
recession. 

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That's what Baron says is the 
primary concern for investors 

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today. 
We also have Japan's market, the

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Nikkei, suffering the worst sell
off since 1987. 

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And then we have the young carry
trade unwinding. 

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Now, if you're not familiar with
the young carry trade, that 

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makes you normal. 
Most people aren't. 

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We'll be discussing what it is 
and how it's impacting the 

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market. 
And then finally, perhaps the 

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biggest news and maybe the most 
rattling for the market is the 

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news that came Sunday that 
Warren Buffett sold half his 

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apple steak. 
Half his apple steak is massive.

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This wasn't a normal 5 to 10% 
position. 

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This was 50% of his public 
portfolio. 

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He had well over $150 billion of
apple and he sold half the 

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steak. 
It's bumped up his cash balance 

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to currently $278 billion. 
This is the most cash that 

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Berkshire has ever had. 
Why did Warren Buffett decide to

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dump half his Apple position? 
Why is he raising so much cash? 

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Why did Berkshire recently just 
sell a lot of their Bank of 

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America position? 
They're doing a lot of sells and

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we're going to get to the bottom
of it. 

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And then of course, we're going 
to be looking at My Portfolio, 

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what I'm currently buying during
this market chaos and much more.

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So we have a lot to get into. 
Let's go ahead and jump in now. 

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We can first start off by 
talking about the sell off 

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today. 
After a stable 2024, a pretty 

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smooth sailing 2024, we finally 
got our first taste of a big 

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sell off. 
It reminded us way back of the 

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COVID era. 
Remember then when we'd have 

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sell offs like this quite 
frequently? 

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Well, this gave us a little bit 
of that memory. 

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And for a lot of people, that's 
not a fun experience. 

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Seeing your stocks dive 1015% in
a single day is not fun. 

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Seeing the major indices down 4%
in a day is really not fun. 

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That's a lot of money if you've 
built up your investments over a

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long period of time. 
In many cases it shows us the 

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investments take the staircase 
up and the elevator down. 

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When the stock market drops, it 
drops very quickly and quick 

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drops in the market cause panic.
Now behind this drop, there's a 

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lot of different things. 
There's a lot of different 

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factors. 
The main one that Barons says 

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the biggest factor is recession 
fares. 

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This was caused by fares that 
the US is at risk of recession. 

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After Friday's week, job reports
triggered mayhem across global 

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markets. 
So there we have it. 

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We have a jobs report come out 
that's a little bit weaker than 

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expected. 
We have the Fed that has not 

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lowered interest rates, and now 
there's many people speculating 

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that the weak jobs is the start 
of a recession. 

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Jobs are a lagging indicator. 
They show us when a recession is

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already started by the job 
market falling apart. 

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Once a lot of people lose their 
jobs, that is the single biggest

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indicator that we're now in a 
recession. 

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So seeing any indication of 
weakness in the job market 

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scares investors. 
Now this week, jobs report in 

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the US also had an impact on 
Japan. 

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Japan's Nikkei, which is like 
their index, their S&P 500, had 

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its worst day since 1987, 
falling 12.4%. 

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So we've fallen so far somewhere
around 2 to 4%. 

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Imagine the market falling 12.4%
in a single day. 

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That's what just happened in 
Japan. 

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Over the past month, it's down 
over 25%. 

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You're seeing a decline in 1/4 
of your wealth, 1/4 of your net 

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worth in just a month. 
This is an incredible sell off 

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in Japan. 
This is cause for two primary 

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reasons. 
One of them is the US job market

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being disappointing. 
We don't live in an isolated 

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insular environment where what 
goes on in the US doesn't impact

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the rest of the world. 
This is global markets. 

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What happens in the US impacts 
the rest of the world. 

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So if the US is going into a 
recession, the biggest, most 

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powerful GDP country in the 
world is headed into a 

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recession. 
It's going to impact the rest of

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the world in a negative manner 
and in many cases worse than the

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impact on the US. 
So this is having a secondary 

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impact on Japan. 
And the biggest problem is Japan

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also has another factor. 
The yen surged, and this is 

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unwinding a trade called the yen
carry trade. 

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The yen carry trade is pretty 
simple. 

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Interest rates are really low in
places like Japan, and they're 

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really high in places like 
Mexico. 

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So investors are borrowing money
from Japan and investing in 

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places like Mexico and earning 
the difference. 

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It is an arbitrage play. 
This trade depends on borrowing 

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currencies remaining cheap and 
market volatility remaining low.

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Both of those factors have 
turned against investors in 

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recent weeks as the yen has 
surged, forcing them to close 

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out of their positions. 
So all these investors that have

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been doing this trade, borrowing
money from Japan in this low 

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interest rate, low volatility 
environment and investing in 

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places like Mexico are finding 
that this trade is collapsing 

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and you're seeing them head for 
the exits. 

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Hedge funds and other 
speculative investors were 

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holding more than 180,000 
contracts, betting on weaker yen

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on a net basis worth more than 
$14 billion. 

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By last week, those positions 
have been cut to around 6 

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billion. 
So this trade is halfway over. 

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So many people are heading for 
the exits and the data shows 

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that it's not done yet. 
We're going to see further 

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unwinding of the young carry 
trade. 

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Now, the big risk for traders 
when they're doing these type of

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investments where they're 
betting 1 currency against 

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another and earning the 
difference between the two, of 

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course, is currency risk, which 
is volatility and changes in the

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value of of currency or interest
rates. 

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That risk is immense when you're
using a lot of options, a lot of

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leverage. 
Now, in most cases, traders know

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about these risks and so they 
buy insurance, they buy hedging 

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for it. 
But in this case, this trade has

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been so popular that the price 
of hedging has become 

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unaffordable. 
So many of them just decided, 

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you know what, I'm going to go 
without any type of hedging, 

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I'll go without any type of 
insurance. 

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With so many traders not buying 
any insurance for the past 

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couple of years and now there's 
a lot of volatility, they're all

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rushing to do so. 
Since they're all rushing to 

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hedge now, it's creating a lot 
of demand for the yen, 

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increasing the price and value 
of the yen. 

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This creates a vicious circle. 
As more and more of them are 

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rushing to hedge their position,
it increases the value of the 

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yen. 
As the yen value increases, more

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of them are closed out of their 
positions, which further 

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increases the value of the yen. 
So you're seeing this circle of 

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people being closed out of this 
trade and the yen increasing in 

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value. 
We don't know how long this is 

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going to take to completely 
unwind, but it is in the process

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of doing so. 
So the Japanese market's 

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currently a mess right now, down
25% and 12% in a single day. 

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You have this vicious cycle 
unwinding with these leverage 

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trades currently unwinding, and 
that's going to last some more 

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time. 
And then you layer upon that the

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news that the US has weak 
economic data. 

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All of that is causing a lot of 
trouble in Japan and some 

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trouble in the US But then, of 
course, I think the biggest news

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out of all of this, perhaps the 
biggest symbolically is Buffett.

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Buffett, the Oracle of Omaha, 
selling half of his Apple 

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position. 
He's talked about this company 

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as being the greatest company in
the world, a pillar of 

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Berkshire, like it's one of the 
third pillars of the company. 

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And here he is chopping away at 
half his shares. 

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We had the news come Sunday. 
The Omaha based conglomerate 

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disclosed in its earnings filing
that it's holding of the iPhone 

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maker is valued at $84.2 billion
in the second quarter, 

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suggesting that the Oracle of 
Omaha offloaded a little more 

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than 49% of the tech stake. 
Even after selling Apple, it 

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remains the largest stake by far
for Berkshire. 

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So he sold roughly half his 
Apple position, but Apple still 

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remains the largest holding in 
Berkshire by far. 

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Now to put this in perspective 
with the rest of his public 

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portfolio, this is what it looks
like. 

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The second largest holding is 
Bank of America, which he's also

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been selling and that was 12% of
the portfolio and then you had 

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Apple at 40.8%. 
Now that is before this news. 

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So he's sold roughly half of 
this. 

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Now Apple makes up roughly 20% 
of the public portfolio, so it's

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still the biggest position by 
about double, but it is much 

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smaller than it was before. 
Before it was 41%. 

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Now it's around 20%. 
He is selling down Apple. 

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Now there's a lot of takeaways 
from this news. 

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Anytime Buffett sells, it's used
for clicks and shock value. 

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But I want to breakdown what 
this cell actually means and the

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reason that Buffett's doing it. 
I want to put this cell in the 

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context. 
Four months ago, I I made a 

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video of why I was trimming my 
Apple position. 

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I was selling down the position 
and I listed off the reasons why

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on the whiteboard. 
The first one and this video is 

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available. 
You can look it up right now, 

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but the first one that I listed 
is Apple trades at a relatively 

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high valuation of a 27 Ford PE 
ratio and expectations of growth

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around 7 to 10% earnings per 
share growth. 

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In summary, Apple is a expensive
company trading at a high 

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multiple that's now growing 
slowly. 

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Now the second reason I listed 
off is Apple's being piled on by

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regulators. 
The EU is fining at $2 billion. 

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They're implementing new 
regulations forcing Apple to 

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open up their App Store. 
This is a weakening of Apple's 

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Moat. 
The more and more regulators 

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tear down the Apple ecosystem, 
the weaker the Moat becomes. 

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Now if we go throughout this 
video, I list off more and more 

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reasons of why I was trimming my
Apple position. 

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Another one was the DOJ lawsuit 
against Google represents a 

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threat against Apple. 
Google pays Apple a lot of money

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to be defaulted. 
If the DOJ ends that 

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relationship, that would be an 
immediate hit to Apple's bottom 

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line. 
So we have the slow growth, the 

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high valuation, the challenges 
from constant regulation and the

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lawsuit against Google, which 
could impact Apple. 

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And then finally, I list the 
final reason I was trimming 

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Apple. 
Let's go ahead and just play a 

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clip from this video from four 
months ago. 

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Warren Buffett is a massive 
shareholder of Apple. 

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He's really championed the 
company, and I believe that he 

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does represent a little bit of 
key man risk in the story of 

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Apple. 
For example, last quarter 

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Berkshire sold 1% of its Apple 
stake. 

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And because Berkshire sold 1%, 
you saw story after story after 

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story of Buffett selling Apple, 
trying to make investors 

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fearful. 
Now, the fact that he only sold 

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1% wasn't great. 
It wasn't positive news. 

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He wasn't buying more Apple, but
it wasn't the worst possible 

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news. 
If we got news that Buffett 

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trimmed his stake by 5 or 10%, 
what would that do to this 

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stock? 
How would investors react to 

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that type of news? 
This analyst argues that 

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Buffett's already up a ton on 
his stake in Apple, which is 

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true. 
He was buying the company 2016. 

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So he's made like five times his
money on Apple already. 

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It represents 50% of his equity 
portfolio. 

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And what would happen if Buffett
started to sell, which he could 

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do because the valuation 
potential issues with it, 

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00:11:17,560 --> 00:11:20,000
Buffett could start to trim the 
holding a little bit more. 

229
00:11:20,080 --> 00:11:23,240
He argues that the likeliers, if
Berkshire sells more shares, 

230
00:11:23,240 --> 00:11:26,280
would be retail investors 
rushing for the exit and Apple 

231
00:11:26,280 --> 00:11:28,760
shares getting slaughtered. 
So I had a list of concerns and 

232
00:11:28,760 --> 00:11:31,160
the reasons why I was training 
my Apple position. 

233
00:11:31,360 --> 00:11:34,160
Part of that being that Warren 
Buffett may sell the stock and 

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00:11:34,160 --> 00:11:36,360
we see a bit of a trade down if 
he does. 

235
00:11:36,680 --> 00:11:39,640
It's not encouraging when one of
the best investors in the world 

236
00:11:39,640 --> 00:11:41,680
is selling out of his stake of a
company. 

237
00:11:42,120 --> 00:11:46,000
And in this case, he didn't just
sell 5 or 10%, he sold 50%. 

238
00:11:46,280 --> 00:11:48,280
And I believe he's going to 
continue selling. 

239
00:11:48,560 --> 00:11:52,000
I don't think Buffett's done. 
And the reason why is simple. 

240
00:11:52,400 --> 00:11:56,160
Apple is a stock that Warren 
Buffett bought back in 2016. 

241
00:11:56,160 --> 00:11:59,720
If we look at the share price, 
we go way back to 2016. 

242
00:12:00,160 --> 00:12:03,800
We have it right here. 
Apple is around $23 per share 

243
00:12:04,280 --> 00:12:07,080
2324. 
This is when Buffett was really 

244
00:12:07,080 --> 00:12:10,640
buying the company. 
At the time Apple traded at a 16

245
00:12:10,640 --> 00:12:14,000
Ford PE ratio. 
At the time Apple was a $600 

246
00:12:14,000 --> 00:12:18,680
billion market cap company. 
It grew dramatically from $20 

247
00:12:18,680 --> 00:12:22,640
per share now up to $200.00 per 
share while paying dividends the

248
00:12:22,640 --> 00:12:25,800
entire time. 
Buffett has made five XS money 

249
00:12:25,800 --> 00:12:28,520
on this investments. 
It'll go down as one of the best

250
00:12:28,520 --> 00:12:31,840
tech investments from any 
investor ever in history. 

251
00:12:32,160 --> 00:12:35,320
It is one of the most 
significant best investments 

252
00:12:35,320 --> 00:12:38,560
ever done in tech. 
And Buffett did that with a huge

253
00:12:38,560 --> 00:12:43,280
chunk of his portfolio. 
He poured $35 billion into Apple

254
00:12:43,520 --> 00:12:45,960
and then 5X that invested 
capital. 

255
00:12:46,400 --> 00:12:49,960
Now again, when he was buying 
Apple, the market cap was around

256
00:12:50,280 --> 00:12:56,120
500 to $600 billion. 
Now it's $3.34 trillion. the PE 

257
00:12:56,120 --> 00:13:00,480
ratio of the company was around 
16 to around 17 depending on the

258
00:13:00,480 --> 00:13:03,600
day he bought. 
Now the PE ratio is 30. 

259
00:13:04,320 --> 00:13:06,400
The earnings per share of the 
company have gone up 

260
00:13:06,400 --> 00:13:09,960
dramatically, but the valuation 
of Apple has doubled since 

261
00:13:09,960 --> 00:13:13,760
Buffett bought the position. 
And Buffett is a value investor.

262
00:13:14,040 --> 00:13:16,280
He likes getting good value for 
what he's buying. 

263
00:13:16,640 --> 00:13:19,120
He likes it when he buys a 
company cheap and the multiples 

264
00:13:19,120 --> 00:13:20,840
go up and it becomes more 
expensive. 

265
00:13:20,960 --> 00:13:24,720
When Buffett was buying Apple 
back in 2016, many people talked

266
00:13:24,720 --> 00:13:26,560
about the company being a weak 
company. 

267
00:13:26,640 --> 00:13:29,320
It was just a hardware company. 
They didn't really have any 

268
00:13:29,320 --> 00:13:33,440
significant software built out. 
But Apple soon became a massive 

269
00:13:33,440 --> 00:13:36,120
software company. 
I followed along with his buy in

270
00:13:36,120 --> 00:13:39,160
2018, and Apple has gone up 
three times since when I 

271
00:13:39,160 --> 00:13:42,120
initially purchased it. 
This is one of the best buys to 

272
00:13:42,120 --> 00:13:45,240
follow Buffett into. 
But Buffett's not only good at 

273
00:13:45,240 --> 00:13:48,280
buying, he's also really, really
good at selling. 

274
00:13:48,440 --> 00:13:50,880
Many investors sell companies at
the wrong time. 

275
00:13:50,880 --> 00:13:54,080
You have investors like Terry 
Smith that sold Estee Lauder too

276
00:13:54,080 --> 00:13:57,640
late, that sold PayPal too late,
that sold Amazon too early and 

277
00:13:57,640 --> 00:14:00,440
into it too early. 
He has trouble with his cells. 

278
00:14:00,720 --> 00:14:04,000
Buffett, on the other hand, is 
pretty good overall with cells. 

279
00:14:04,200 --> 00:14:06,960
He likes to buy companies cheap 
and sell them expensive. 

280
00:14:07,320 --> 00:14:10,000
Now, he's not perfect. 
There's some cases where Buffett

281
00:14:10,160 --> 00:14:13,400
has sold at the wrong time. 
One company that Berkshire sold 

282
00:14:13,760 --> 00:14:18,080
at the wrong time was Costco. 
Berkshire sold Costco in around 

283
00:14:18,080 --> 00:14:20,520
2020. 
So right around here, Berkshire 

284
00:14:20,520 --> 00:14:23,920
Hathaway sold Costco and that 
was a really bad time to sell 

285
00:14:23,920 --> 00:14:26,520
Costco. 
Costco's up over double the 

286
00:14:26,520 --> 00:14:29,480
returns of Berkshire Hathaway 
since they sold the position. 

287
00:14:30,000 --> 00:14:32,880
So Costco is an example of 
Buffett getting the sell wrong. 

288
00:14:33,080 --> 00:14:35,720
This is a company he should have
held onto in hindsight. 

289
00:14:35,720 --> 00:14:38,840
In the case of Apple, only time 
will tell if this is another 

290
00:14:38,840 --> 00:14:42,440
Costco that he should have held 
onto or another great sell from 

291
00:14:42,440 --> 00:14:45,520
Buffett where he sold it at a 
good time given the risk and 

292
00:14:45,520 --> 00:14:48,600
reward. 
If I was to guess right now, I 

293
00:14:48,600 --> 00:14:51,560
believe this is going to be a 
good sell, and I say that 

294
00:14:51,560 --> 00:14:53,440
holding a little bit of Apple 
myself. 

295
00:14:53,760 --> 00:14:57,480
The reason being is that it's 
simply undeniable that Apple is 

296
00:14:57,480 --> 00:15:00,280
trading at a higher valuation 
with lower growth. 

297
00:15:00,280 --> 00:15:03,720
The combination of being higher 
valued with lower growth means 

298
00:15:03,720 --> 00:15:06,360
that there's far more downside 
for Apple than upside. 

299
00:15:06,600 --> 00:15:09,200
The chance of multiple 
compression is far greater than 

300
00:15:09,200 --> 00:15:10,800
the chance of multiple 
expansion. 

301
00:15:11,080 --> 00:15:13,640
Buffett likes to find companies 
that have lots of catalyst 

302
00:15:13,960 --> 00:15:16,840
earnings growth, free cash flow 
growth, and low valuations. 

303
00:15:17,080 --> 00:15:19,240
He likes to get a lot for what 
he's paying for. 

304
00:15:19,520 --> 00:15:23,480
With Apple at $210.00 per share,
it's difficult to see that 

305
00:15:23,480 --> 00:15:26,000
there's going to be any type of 
multiple expansion. 

306
00:15:26,440 --> 00:15:28,000
How are multiples going to 
expand? 

307
00:15:28,320 --> 00:15:31,080
It already trades at a 34 E 
ratio. 

308
00:15:31,400 --> 00:15:33,480
Is it going to go to a 40 or 
A50? 

309
00:15:33,880 --> 00:15:36,280
It might, but you can't really 
count on that. 

310
00:15:36,600 --> 00:15:39,720
It's more than likely going to 
go down a little bit to a 25 or 

311
00:15:39,720 --> 00:15:43,000
23. 
As the growth slows, the PE 

312
00:15:43,000 --> 00:15:45,880
ratio should follow. 
And we've seen this happen with 

313
00:15:45,880 --> 00:15:49,400
other high quality companies in 
the past, ones like Estee Lauder

314
00:15:49,400 --> 00:15:52,400
or Nike, Those companies were 
considered compounding machines,

315
00:15:52,680 --> 00:15:55,440
but when they get too expensive,
the multiples can compress. 

316
00:15:55,440 --> 00:15:57,800
Now, no matter what metric you 
look at, if you compare the 

317
00:15:57,800 --> 00:16:00,480
price of Apple today, the 
valuation of the company 

318
00:16:00,760 --> 00:16:04,280
compared to when he was buying 
it in 2016, he was getting much 

319
00:16:04,280 --> 00:16:07,240
better value in 2016. 
And I think that Apple's 

320
00:16:07,240 --> 00:16:10,120
unlikely to have the same 
returns it's had over the past 

321
00:16:10,120 --> 00:16:11,960
10 years. 
Now, of course, with Buffett 

322
00:16:11,960 --> 00:16:14,640
selling half of his Apple 
position, this raises another 

323
00:16:14,640 --> 00:16:16,320
question. 
What is he going to do with all 

324
00:16:16,320 --> 00:16:18,920
this money? 
Half his Apple position was $80 

325
00:16:18,920 --> 00:16:21,160
billion. 
This brought the total cash 

326
00:16:21,160 --> 00:16:26,040
balance of Berkshire to an 
incredible $277 billion. 

327
00:16:26,320 --> 00:16:28,520
This is the most money that 
Berkshire has ever held, the 

328
00:16:28,520 --> 00:16:32,280
most cash they've ever had. 
This is over a quarter trillion 

329
00:16:32,280 --> 00:16:35,160
dollars in cash. 
It's really an incredible amount

330
00:16:35,160 --> 00:16:37,240
of money. 
Now, of course, anytime Buffett 

331
00:16:37,240 --> 00:16:40,440
does some big sells and he has a
lot of cash, that raises some 

332
00:16:40,440 --> 00:16:42,600
eyebrows. 
Why is Buffett, the best 

333
00:16:42,600 --> 00:16:44,880
investor in the world, holding 
so much cash? 

334
00:16:45,080 --> 00:16:47,280
Something that's helpful to do 
is anytime you look at the 

335
00:16:47,280 --> 00:16:49,560
amount of cash that Berkshire 
has, you have to put that in 

336
00:16:49,560 --> 00:16:51,960
context with how big Berkshire 
is. 

337
00:16:52,360 --> 00:16:54,960
It makes sense for Berkshire to 
hold more cash as a company 

338
00:16:54,960 --> 00:16:57,960
itself becomes bigger. 
If we plot out the tangible book

339
00:16:57,960 --> 00:17:00,760
value of Berkshire against the 
cash balance they currently 

340
00:17:00,760 --> 00:17:03,000
hold, it paints a far clearer 
picture. 

341
00:17:03,240 --> 00:17:05,680
You can see that Berkshire is 
continually gaining in the 

342
00:17:05,680 --> 00:17:08,800
amount of cash they hold as the 
company overall grows. 

343
00:17:09,079 --> 00:17:12,119
The blue line, the top one is a 
tangible book value and 

344
00:17:12,119 --> 00:17:15,560
Berkshire grows this year over 
year quite consistently. 

345
00:17:15,800 --> 00:17:18,599
You can see the tangible book 
value just continuing to go up. 

346
00:17:19,040 --> 00:17:22,319
Now you also see the cash 
balance going up with the 

347
00:17:22,319 --> 00:17:25,599
tangible book value and they go 
up almost in parallel. 

348
00:17:25,920 --> 00:17:27,280
There is some zigging and 
zagging. 

349
00:17:27,280 --> 00:17:29,560
There's sometimes where they do 
some buys and the cash balance 

350
00:17:29,560 --> 00:17:31,680
will go down in proportion of 
the book value. 

351
00:17:32,080 --> 00:17:34,560
But overall you see consistency 
here. 

352
00:17:34,880 --> 00:17:38,240
As Berkshire grows as a company,
they also grow their cash 

353
00:17:38,240 --> 00:17:40,880
balance. 
And This is why the headline the

354
00:17:40,880 --> 00:17:43,600
Berkshire's holding a record 
amount of cash is a bit 

355
00:17:43,600 --> 00:17:46,160
misleading. 
They're always holding a record 

356
00:17:46,160 --> 00:17:49,040
amount of cash. 
In 2022, they're holding a 

357
00:17:49,040 --> 00:17:52,000
record amount of cash. 
In 2018, they're holding a 

358
00:17:52,000 --> 00:17:54,880
record amount of cash. 
The same thing with 2016 and 

359
00:17:54,880 --> 00:17:59,600
2014 and 2008 and 2005. 
As a company grows overall, they

360
00:17:59,600 --> 00:18:01,040
grow the amount of cash they 
hold. 

361
00:18:01,280 --> 00:18:03,360
And this is consistent with 
their history. 

362
00:18:03,520 --> 00:18:06,320
So the headlines of the record 
cash that Berkshire holds is a 

363
00:18:06,320 --> 00:18:08,520
little bit less scary when you 
put it in context. 

364
00:18:08,960 --> 00:18:12,040
The thing that concerns me more 
than the record cash they hold, 

365
00:18:12,280 --> 00:18:14,400
something that I actually look 
at that does raise some 

366
00:18:14,400 --> 00:18:18,560
eyebrows, is this chart right 
here, Berkshire's net purchases 

367
00:18:18,560 --> 00:18:22,760
or sales over time. 
This goes back to 2017 and it 

368
00:18:22,760 --> 00:18:25,160
shows how much they bought or 
sold every single quarter. 

369
00:18:25,640 --> 00:18:28,200
The red, of course, is when 
Berkshire is selling. 

370
00:18:28,520 --> 00:18:30,800
The green is when they're 
buying, and this Nets out their 

371
00:18:30,800 --> 00:18:32,840
sales and buys. 
What you can see is that 

372
00:18:32,840 --> 00:18:37,240
overtime from 2017 to 2022, 
Berkshire was a buyer. 

373
00:18:37,560 --> 00:18:40,840
They're buying shares of 
companies in net over those 

374
00:18:40,880 --> 00:18:44,360
three or four years. 
Then you get to December of 2022

375
00:18:44,680 --> 00:18:48,280
and all of a sudden they start 
selling from December of 2022 to

376
00:18:48,280 --> 00:18:51,360
June of 2024. 
They are a net seller every 

377
00:18:51,360 --> 00:18:53,600
single quarter. 
That's seven quarters of 

378
00:18:53,600 --> 00:18:55,800
consecutive net selling from 
Berkshire. 

379
00:18:55,920 --> 00:18:58,560
Why is Buffett selling right now
quarter over quarter without 

380
00:18:58,560 --> 00:19:01,120
doing any buys? 
Well, Buffett himself will tell 

381
00:19:01,120 --> 00:19:04,680
you that he does not sell based 
on anticipation of market 

382
00:19:04,680 --> 00:19:06,800
events. 
So he's not selling because of 

383
00:19:06,800 --> 00:19:09,320
what's going on in Japan. 
He's not selling because he's 

384
00:19:09,320 --> 00:19:11,840
predicting a recession. 
He's not selling because of the 

385
00:19:11,840 --> 00:19:14,040
jobs report. 
That's not the reason that 

386
00:19:14,040 --> 00:19:16,200
Buffett sells. 
The reason that he sells is 

387
00:19:16,200 --> 00:19:19,320
multiples have gone up, growth 
has slown, and he does not see 

388
00:19:19,320 --> 00:19:22,280
good value with his companies. 
He sees better values just 

389
00:19:22,280 --> 00:19:24,480
holding it in Treasuries. 
That's the reason that he's 

390
00:19:24,480 --> 00:19:27,320
cashing out of these positions. 
Buffett will be a buyer when 

391
00:19:27,320 --> 00:19:30,520
free cash flow yields go up. 
When PE ratios go down, that's 

392
00:19:30,520 --> 00:19:32,280
when he'll start to buy stocks 
again. 

393
00:19:32,520 --> 00:19:36,280
He is a value investor. 
He buys low, sells high. 

394
00:19:36,480 --> 00:19:38,480
Stocks right now are rather 
expensive. 

395
00:19:38,720 --> 00:19:43,600
Even with today's scary sell off
of 2 to 3%, both the S&P 500 and

396
00:19:43,600 --> 00:19:46,280
the QQQ are in the green by 
around 10%. 

397
00:19:46,360 --> 00:19:48,920
The stock market's doing great. 
Valuations are high. 

398
00:19:49,200 --> 00:19:51,800
Most people have been greedy 
over the past year, pushing 

399
00:19:51,800 --> 00:19:54,400
prices up and up. 
Buffett does not follow the 

400
00:19:54,400 --> 00:19:56,400
trends. 
He doesn't follow the herd as 

401
00:19:56,400 --> 00:19:59,040
people are buying the market, 
pushing prices up and up. 

402
00:19:59,240 --> 00:20:03,000
He sells out when everyone 
finally capitulates and starts 

403
00:20:03,000 --> 00:20:05,400
to sell out of their positions 
when they start to. 

404
00:20:05,520 --> 00:20:07,600
Give up on great companies that 
are earning money. 

405
00:20:07,840 --> 00:20:09,960
Buffett will be a buyer. 
So if you want to invest like a 

406
00:20:09,960 --> 00:20:13,320
Buffett, you do not play the 
game of predicting recessions or

407
00:20:13,320 --> 00:20:16,000
economic events. 
You buy and sell based off of 

408
00:20:16,000 --> 00:20:18,280
value. 
He bought Apple during a time 

409
00:20:18,280 --> 00:20:21,400
period where it was cheap value.
He's now selling it during a 

410
00:20:21,400 --> 00:20:24,520
time period where it's expensive
and everyone else wants to buy 

411
00:20:24,520 --> 00:20:26,160
it. 
He buys during times of 

412
00:20:26,160 --> 00:20:29,280
distress, when people are scared
and anxious and selling out of 

413
00:20:29,280 --> 00:20:31,840
their positions. 
He sells in the strength when 

414
00:20:31,840 --> 00:20:34,720
people are happy, when they're 
making money, when valuations 

415
00:20:34,720 --> 00:20:37,480
are pushed up to extremes. 
Buffett doesn't follow trends. 

416
00:20:37,480 --> 00:20:39,680
He doesn't just push prices up 
higher and higher. 

417
00:20:39,840 --> 00:20:43,160
He buys great companies at low 
valuations and holds them long 

418
00:20:43,160 --> 00:20:45,960
term. 
He's held Apple since 2016. 

419
00:20:46,280 --> 00:20:49,480
And this sale of Apple, which I 
believe will continue, I think 

420
00:20:49,480 --> 00:20:52,400
will be one of the best trades 
ever done in history. 

421
00:20:52,680 --> 00:20:55,200
And I think it's going to be one
of Buffett's best trades that 

422
00:20:55,200 --> 00:20:57,200
he's ever done with his track 
record. 

423
00:20:57,520 --> 00:21:00,720
The size of this trade, the 
profitability of it, the timing 

424
00:21:00,720 --> 00:21:03,560
of buying it when nobody else 
wanted it, and selling it during

425
00:21:03,560 --> 00:21:06,720
a time where there's so much 
talk of AI and everyone wants to

426
00:21:06,720 --> 00:21:10,680
buy Apple is just incredible. 
And it shows how good he is of 

427
00:21:10,680 --> 00:21:12,680
an investor. 
He's had other misses. 

428
00:21:12,680 --> 00:21:14,880
He's had smaller bets with 
different companies that he's 

429
00:21:14,880 --> 00:21:17,240
missed on. 
But those pale in comparison to 

430
00:21:17,240 --> 00:21:19,640
the size and scale of this Apple
investment. 

431
00:21:19,960 --> 00:21:22,440
It really is remarkable. 
If we want to invest like 

432
00:21:22,440 --> 00:21:25,000
Buffett, we want to buy great 
companies when they come at 

433
00:21:25,000 --> 00:21:28,360
discounted prices, when for some
reason the market doesn't like 

434
00:21:28,360 --> 00:21:31,320
these companies and they're at 
low valuations portfolio, that's

435
00:21:31,320 --> 00:21:33,400
the goal. 
It's to buy high quality 

436
00:21:33,400 --> 00:21:36,880
companies at dislocated prices 
and hold them long term and 

437
00:21:37,120 --> 00:21:40,320
allow them to compound. 
Now today I have been doing a 

438
00:21:40,320 --> 00:21:42,760
series of buys. 
I have been buying booking, 

439
00:21:42,760 --> 00:21:44,080
holding. 
Booking Holding is a new 

440
00:21:44,080 --> 00:21:46,800
position to the portfolio. 
I'm just buying into it and I've

441
00:21:46,800 --> 00:21:49,840
increased my stake dramatically 
over the past month as it's sold

442
00:21:49,840 --> 00:21:52,520
down. 
Booking is selling down because 

443
00:21:52,520 --> 00:21:54,280
of these general fares of the 
market. 

444
00:21:54,720 --> 00:21:57,240
It's going down a lot even 
though the fundamentals are 

445
00:21:57,240 --> 00:21:59,720
incredible. 
It trades at a low valuation and

446
00:21:59,720 --> 00:22:03,040
18 Ford PE ratio, a 6% free cash
flow yield. 

447
00:22:03,360 --> 00:22:06,840
These are really healthy numbers
and the company has incredible 

448
00:22:06,840 --> 00:22:09,000
fundamentals. 
Their gross bookings is at an 

449
00:22:09,000 --> 00:22:10,920
all time high growing year over 
year. 

450
00:22:10,960 --> 00:22:13,480
Room nights sold continues to go
up quarter over quarter. 

451
00:22:13,680 --> 00:22:16,240
Even the most recent quarter 
this year there's more room 

452
00:22:16,240 --> 00:22:18,960
nights sold than last year. 
The company is super high 

453
00:22:18,960 --> 00:22:22,000
margin, super profitable. 
Look at the free cash flow 

454
00:22:22,000 --> 00:22:25,320
growth over time. 
On a free cash flow per basis, 

455
00:22:25,440 --> 00:22:29,400
they grew by 25% year over year.
This is faster than Visa or 

456
00:22:29,400 --> 00:22:32,760
MasterCard or S&P Global or many
other companies I hold. 

457
00:22:33,040 --> 00:22:36,120
So I have a company that's 
growing incredibly fast, trading

458
00:22:36,120 --> 00:22:38,800
at a low valuation. 
And of course, if there is any 

459
00:22:38,800 --> 00:22:41,560
trouble with the company that 
continues to sell down because 

460
00:22:41,560 --> 00:22:44,400
of fears of an upcoming 
recession, they'll just continue

461
00:22:44,400 --> 00:22:46,640
to buy back their shares, which 
is something they've done 

462
00:22:46,680 --> 00:22:48,960
aggressively over the past 10 
years. 

463
00:22:48,960 --> 00:22:53,600
Since 2014, the shares have gone
from 53,000,000 down to 36 

464
00:22:53,600 --> 00:22:56,800
million. 
Last here they bought back 7% of

465
00:22:56,800 --> 00:22:58,960
their total market cap. 
So this company is a buyback 

466
00:22:58,960 --> 00:23:01,000
machine that pays a dividend at 
the same time. 

467
00:23:01,040 --> 00:23:04,240
Now if we go into a recession, 
Booking Holding may trade down, 

468
00:23:04,440 --> 00:23:06,760
but because of the high margins 
of this business, they'll be 

469
00:23:06,760 --> 00:23:08,480
fine. 
They'll be able to buy back 

470
00:23:08,480 --> 00:23:11,720
their shares aggressively even 
in the case of a recession. 

471
00:23:12,200 --> 00:23:14,920
So I don't fear going into 
recession even with a travel 

472
00:23:14,920 --> 00:23:17,120
company. 
Some people think that's crazy, 

473
00:23:17,200 --> 00:23:20,120
but recessions only last 
typically for a year. 

474
00:23:20,440 --> 00:23:23,760
One year of holding a company, 
you might have a down year. 

475
00:23:23,760 --> 00:23:26,200
And in this case, I see a great 
future and great current value 

476
00:23:26,200 --> 00:23:27,880
for the company. 
So that's what I've currently 

477
00:23:27,880 --> 00:23:29,960
been buying. 
But I also have been holding all

478
00:23:29,960 --> 00:23:32,840
of my companies. 
I hold my Costco shares, I hold 

479
00:23:32,840 --> 00:23:35,880
my Texas Roadhouse shares. 
I still hold all of my S&P 

480
00:23:35,880 --> 00:23:39,400
Global MasterCard, Intuit and 
Moody's, Microsoft and Apple and

481
00:23:39,400 --> 00:23:41,800
all of these companies. 
I'm not concerned about a 

482
00:23:41,800 --> 00:23:44,320
potential potential recession. 
It just doesn't worry me. 

483
00:23:44,600 --> 00:23:46,960
All of these companies will be 
able to pull through in the 

484
00:23:46,960 --> 00:23:48,800
story fund. 
It's given back some of its 

485
00:23:48,800 --> 00:23:52,400
gains this year, but still, year
to date it's up 12.7%, which 

486
00:23:52,400 --> 00:23:54,920
beats out the S&P 500 and the 
QQ. 

487
00:23:55,160 --> 00:23:59,680
We're still up $48,000 in this 
portfolio even after Amazon has 

488
00:23:59,680 --> 00:24:02,360
been hammered today, down 5 or 
6%. 

489
00:24:02,840 --> 00:24:05,240
So even though these companies 
are trading down a little bit, 

490
00:24:05,440 --> 00:24:08,480
it doesn't concern me at all. 
Intrinsically, they're growing 

491
00:24:08,480 --> 00:24:10,200
day by day, quarter over 
quarter. 

492
00:24:10,520 --> 00:24:13,080
Amazon's going to be worth a lot
more in the next three years 

493
00:24:13,080 --> 00:24:15,480
than they are today. 
Overall, what I'm looking for 

494
00:24:15,480 --> 00:24:18,360
are companies that will steadily
grow their cash flows quarter 

495
00:24:18,360 --> 00:24:21,320
over quarter, year over year. 
I like companies that have 

496
00:24:21,320 --> 00:24:23,520
earnings growth and free cash 
flow per share growth. 

497
00:24:23,840 --> 00:24:26,680
And even if the price comes 
down, as long as they're growing

498
00:24:26,680 --> 00:24:29,400
in their cash flows and 
earnings, I feel fine about it. 

499
00:24:29,640 --> 00:24:31,440
It just means that it's a 
temporary dip. 

500
00:24:31,480 --> 00:24:33,520
It means that eventually will 
recover. 

501
00:24:33,760 --> 00:24:36,640
If not, they can do buybacks and
dividends and grow their 

502
00:24:36,640 --> 00:24:39,600
earnings even faster. 
When the fundamentals are going 

503
00:24:39,600 --> 00:24:43,000
up and the price is going down, 
that is the best situation to be

504
00:24:43,000 --> 00:24:44,720
a buyer. 
That's the best situation to be 

505
00:24:44,720 --> 00:24:46,680
an investor. 
The issues you should avoid as 

506
00:24:46,680 --> 00:24:49,440
an investor are when the 
fundamentals go down, when the 

507
00:24:49,440 --> 00:24:53,000
earnings and cash flows go down.
That's a situation like Intel. 

508
00:24:53,440 --> 00:24:56,000
Intel's having fundamental 
damage to the company. 

509
00:24:56,160 --> 00:24:59,760
It's down over 50% this year. 
It's not coming back quickly. 

510
00:25:00,080 --> 00:25:03,040
This is the situation I try to 
avoid is when the actual 

511
00:25:03,040 --> 00:25:05,240
fundamentals of the company are 
tanking. 

512
00:25:05,600 --> 00:25:08,200
I don't have any company in My 
Portfolio where that's the case.

513
00:25:08,600 --> 00:25:11,240
Every single position I hold is 
growing in it's free cash flow, 

514
00:25:11,400 --> 00:25:12,840
growing in it's earnings per 
share. 

515
00:25:13,160 --> 00:25:15,440
So if prices come down, that's 
fine with me. 

516
00:25:15,440 --> 00:25:17,640
I'm going to be a buyer. 
So as far as I'm concerned, 

517
00:25:17,640 --> 00:25:19,760
nothing changes with news like 
this. 

518
00:25:19,800 --> 00:25:22,280
Even if we go into recession, 
that should be something that's 

519
00:25:22,280 --> 00:25:24,800
already planned in terms of your
investment strategy. 

520
00:25:25,200 --> 00:25:27,440
And if this does cause a lot of 
grief, if you're genuinely 

521
00:25:27,440 --> 00:25:30,720
concerned about the past couple 
of days, And I think that may be

522
00:25:30,720 --> 00:25:33,640
a, a message that you need to 
rethink your investment strategy

523
00:25:33,920 --> 00:25:36,880
and maybe rethink your portfolio
because you should be well 

524
00:25:36,880 --> 00:25:38,480
prepared for these type of 
instances. 

525
00:25:38,760 --> 00:25:42,280
It's not unusual at all for 
stocks to drop dramatically in a

526
00:25:42,280 --> 00:25:44,720
couple of days and you should be
prepared for that. 

527
00:25:45,040 --> 00:25:47,000
That's all for this episode. 
See you in the next one.