Well,I think this time global stocks wont stage a V-shaped recovery like in 2008 GFC.The current crisis is unlike what we have seen before.First its a health crisis that pricked the biggest debt bubble in history that has been built up over decades.There was simply too much leverage and money printing in Western markets post 2008 and bursting of such massive debt bubbles at times takes decades to recover.It took nearly 25 years for the Dow to recover from the 1929 crash and many assume that the globe maybe going into a Great Depression type disaster.This time its not just a financial crisis like 2008 GFC but a health and monetary crisis and this could usher a whole new financial and monetary dispensation in what contrarian refer to as the great reset.I doubt the Dow will reach its all time highs of 29,551.42 anytime soon.Maybe it could do so in nominal terms if the Fed prints enough trillions to re-inflate the stock market bubble but it would be meaningless.Venezuela's stock market has been the best performing for many years because they printed their bolivar currency to hyperinflation so nominal gains are worthless.Considering that Western investors constitute the majority of the players in the NSE,how Western markets recover will have an equal trend to how the Kenyan bourse recoups from losses.If first world markets stage a V shaped recovery (I doubt they will) then yes the NSE will have a similar V shaped recovery.If I as suspect Western markets have a prolonged U shaped or even L shaped recovery then the NSE will suffer a long recovery time frame.

@slick - The thread becomes very long and a waste of online estate so let me respond here.

You are concentrating on the airline stocks that constitute less than 4% of the LISTED portfolio. And an even smaller % when the unlisted portfolio is included. And even tinier when the $120bn cash/treasuries is included.
I estimate max of 1.5% (of all assets) before the COVID19 crisis.
BUT I will address it.

WB is not being sly but making smart moves in that others can also buy shares in USA airlines eg Delta, Southwest, etc.
He is seeing an opportunity but that also comes with risk while others look but do not see.

As for the bailout of airlines, I agree that they (shareholders, executives and board) should pay the price for taking loans to buyback shares. They should have only used excess cash to do so and at prices that made sense but not those done to benefit a few e.g. CEO, CFO, etc with options. I hope they are forced to regurgitate their unearned bonuses.

That said, there is a case for some compensation for the airlines since the bans were not of their own making but limited to certain parameters and factors e.g. employees pay, etc. If there were no bans then they would have continued flying. Nevertheless, this does not mean a bailout that makes executives even richer as happened in 2008 with the banks. That should be a NO-NO.

The primary reason WB can invest today is his foresight in keeping $120bn of dry gunpowder. This cash cost a lot to keep it in cash aka cash drag for years.

Excluding the airlines (1.5% of the portfolio), there are multiple other sectors he can buy into on the cheap. I expect some sweet deals from firms requiring short-term funding. Others will be up for sale and will complement BH-owned firms. What he calls bolt-on acquisitions.

2020 will be a tough year for BH e.g. Precision Castings (Boeing is its largest customer), BNSF (drop in oil shipments), WF, JPM, USB (loan defaults) and many others but they can make it through to come out stronger thanks to the $120bn cash to cushion them. Some competitors will die. Some will sell themselves to BH.

We should learn from WB on having a diversified yet focused portfolio, not paying too much and some dry gunpowder. Sadly, I have not taken all the lessons to heart especially the dry gunpowder!

@slick - He is but one and not always the largest shareholder in many of the listed firms.

The bailouts - I am not justifying them - aren't applicable just to "his" investments. I would assume ALL airlines would benefit from a bailout and not just those he has invested in.

So of the total value of the bailout, WB/BH would benefit from just a small percentage. I do not have the numbers but if you can dig them up then we can discuss them.

@slick - Did you actually read the https://imgur.com/HWu3X1q.jpg article?

These firms do not make up the tax laws but like any smart folks try to take advantage of them.
That's why some e.g. Steve Forbes pushes for a simple tax code eg Flat Tax. The same should apply to Kenya.

As the lower tax rate paid by WB vs his secretary, that is the tax code. Nothing WB did. That's the legislature doing its thing.

Do note that double taxation often applies to those who receive dividends so the tax on the dividend is in addition to the corporate tax already paid.

These firms do make these tax laws.Corporate America is the most powerful lobby machine paying off and placing their key agents in political offices to push their agenda like tax cuts.Its the whole essence of crony capitalism.When you for instance have Goldman Sachs alumni serving at US Treasury Secretaries like Steve Mnuchin,Hank Paulson,Robert Rubin is one surprised that firms like Goldman Sachs get bailed out or former ECB President Mario Draghi or Bank of England and Canada Mark Carney being Goldman alumni?

So these tax codes are pushed by corporates that favour them.Big corporates own the United States not the politicians and the political class is there to serve the corporate interests.Most of these politicians when they retire from active politics go to serve as executives in corporates.



Its unfortunate that these corporate used the revenue preserved from the tax cuts into stock buybacks and executive bonuses and the whole scheme is now unravelling as stocks tank then they go begging for bailouts.

On Amazon, why didn't they pay federal income tax? Did they make losses? Did they enjoy special tax incentives? Were they involved in tax avoidance schemes? Nevertheless have you considered Amazon's other contributions to the US like State Income Tax, GST (VAT), Customs and Excise Duties, tax on employee salaries and benefits? I think it's intellectual dishonesty on your part to claim that Amazon does not pay federal income tax without considering all the relevant factors.

Amazon is being smart. As it should be.

They ask different states/countries for tax breaks to locate their warehouses in that state/country.
Countries e.g. Kenya, Ethiopia do that as well.

We also do so in our private lives.

Renters will move when they find cheaper/better lodgings. Some landlords are offering discounts ("tax breaks") to good tenants so they do not move.

Avoidance is legal. Evasion is illegal. Choices have consequences. People should or vote for those who will represent their interests.
Capitalism is OK. I am against Cronyism be it in any system including socialism.

@Sparkly.What you have said is true.Tax incentives,tax rebates do spur organizations to keep their operations in countries that offer these tax relief programs.I had indicated in an earlier post that I am of the free-market,limited government Austrian school where government involvement in the economy and private business should be as limited as possible and taxation should be low as possible to allow firms keep as much revenue as possible and plough back into their businesses for greater productivity.In principle I agree to this.I normally see government as a major hindrance to economic activity and the free market should be allowed to produce and retain as much capital as possible.Free markets will always prevail in allocating capital more optimally than government that deploys taxation revenue into malinvestments like bloated militaries (look at US over 700 billion USD military budget-utterly ridiculous and US can survive on a 200 billion or less military budget and still be the largest defence spender in the world) or China's ghost cities.

Thus my ideal situation is what I have described above.However,since the Western governments have committed themselves into running a debt based monetary system and a welfare state (both of which I disagree with) that require debt to exponentially grow to maintain the system and social programs to provide for the less priviledged then high taxation is an inevitable reality in maintaining both these systems.Since they have chosen this route,then to obtain this high tax revenue in a fair manner then those with more capital and resources should pay a higher tax rate than those with less capital.To have Warren Buffet pay a lesser tax rate than his secretary is ridiculous.To have Amazon not pay federal income tax is also an abomination where the middle class is paying a higher tax rate relative to their income than the billionaires.Its such shenanigans that keeps expanding the wealth gap between the rich and poor.To have a situation where corporations take advantage of tax relief to pump up their own stock in stock buybacks and grotesque executive bonuses then when a black swan pops up they want Fed money printed bailouts that eventually the taxpayer has to payback is asinine.

In conclusion,if the US wants to give tax incentives to large corporations to maintain their business activities within their borders then they should not pass the tax burden to the middle class where the middle strata pays a higher tax rate relative to income than the mega businesses and the mega rich.

Very Well. Here you go.



Source: https://tradingroom.co.k...rading-activity-in-2019/