Key insights
- The author argues a market crash is unlikely due to rational valuations, tech benefiting from remote environments during war, and Berkshire Hathaway's large cash position acting as a backstop. War is bullish for tech. Berkshire's cash will fuel a rapid V-shaped recovery if a crash occurs, as it will trigger widespread buying.
-
Back in year 2000, there were startup companies getting valued insanely high despite not making any revenue. The stock market is now very rational, small companies that don't make money and just slap on the AI jargon like Allbirds are already crashed back down. The only companies that are still up are large companies who are making a lot of revenue to justify their valuation. We aren't in a bubble, companies are just better at making profit now thanks to technology making them more efficient.
-
War is good for tech stock. During the war, Israel was in work from home/ classes from home mode. This is similar to Covid time, and remember how Covid's work/study from home boost tech stocks' revenue? The more war break out in more countries, the more countries will be in remote environment, the more money tech companies are going to make, which justify their higher price during war time. Besides, this isn't 2000 BC, we aren't fighting with stick and stone anymore. We are fighting using tech now. So war is super bullish for tech stocks.
-
Finally and most importantly, we can only have a crash when everyone deployed all their cash and no longer have any money left to buy. Look at Berkshire's all time high cash pile. Buffet is dying and he doesn't cash about holding cash because he will never run out of cash before he die. But his successor is dying to get in, but he would look like a fool if he was to finally deploy that pile of cash now at all time high. However, if the market ever has a real crash, that will be his opportunity to buy in, thus consequently bailing us all out.
If the market does crash, we will have the fastest V shape recovery right away because Berkshire will bail out the market with their giant cash pile. And when the news broadcast that Berkshire finally buy, everyone and every hedge fund will get in too.