By Wong Kon How
What Berkshire Hathaway said in their annual meeting about the euphoria phase of the markets? Here are the highlights and it matches the 3 phases of every “Growth” stage.
Warren Buffett lambasted Wall Street for encouraging speculative behavior in the stock market, effectively turning it into a “gambling parlor.”
“The investment banks and brokerages don’t make money unless people do things, and they get a piece of them. They make a lot more money when people are gambling than when they are investing.”
“Wall Street makes money, one way or another, catching the crumbs that fall off the table of capitalism,”
The use of call options, saying that brokers make more money from these bets than simple investing. The large American companies have “became poker chips” for market speculation.
“We have people who know nothing about stocks being advised by stock brokers who know even less,” Munger said. “It’s an incredible, crazy situation. I don’t think any wise country would want this outcome. Why would you want your country’s stock to trade in a casino?”
How to position yourself in a time of euphoria?
Always be cash-rich now, and in times of need, would be “better than the banks” at extending credit lines to companies.