1、Counterattack war

In the first quarter of this year, Buffett's fan hype, lost a lot of money, bank stocks and aviation stocks are the worst-hit areas. Delta Airlines, in particular, began to rebound crazily as soon as it cut the meat, allowing the Don to cut to the floor at one point.

The first-quarter performance of the "Waterloo", the operation of mixed praise, but fortunately played a counterattack in the second quarter, of course, mainly depends on the overall rebound of US stocks.

Berkshire's holdings were worth $207.454 billion at the end of the second quarter, up 14.75% from the end of the first quarter. The increase in the market value of positions does not come from a substantial increase in principal, but from a sharp rebound in their own positions. In fact, this rate of return does not outperform the three major indices, and is far lower than the 30% of the Nasdaq.

Berkshire made a profit of $26.3 billion in the second quarter, up 86.8% from a year earlier, compared with a huge loss of $49.7 billion in the first quarter. Equivalent to the first half of the year, it still suffered a huge loss of 23.4 billion US dollars. The overall performance was not bright, and Berkshire's share price was also depressed, falling 1.73% in the second quarter, while the s & p 500 rebounded nearly 20%.

Let's take a look at the heavy stocks.Buffett holds $91.5 billion in Apple Inc, accounting for 44% of the total position, which is an exaggeration. This is up 43% from the $63.8 billion held in the first quarter, and contributed to the second-quarter profit of 2UP3.Apple Inc's stock price rebounded 43% in the second quarter, which shows that Buffett did not increase his position in Apple Inc.

In addition to Apple Inc, Buffett also holds heavy positions in Bank of America Corporation, Coca-Cola Company and American Express Co, with a market capitalization of $22.6 billion, $17.9 billion and $14.4 billion, respectively, but both have shrunk from their positions at the end of 2019.

Bank of America Corporation, in particular, has lost 32.3% of its market value since the end of 2019. The share price of Bank of America Corporation fell 24% in the same period (the first half of the year). It can be seen that Buffett also has a position reduction operation on his favorite bank stocks. Not only Bank of America Corporation, Buffett has also significantly reduced his positions in Goldman Sachs Group and JPMorgan Chase & Co, and the proportion of financial stocks has been reduced from more than 40 per cent at the end of 2019 to 28.56 per cent of the current ratio.

2、Bottom bank

However, for financial stocks, Buffett is still reluctant to part. It increased its stake in Bank of America Corporation almost every day from July 20 to August 4, buying a total of $2.07 billion in three weeks, and its stake in Bank of America rose to nearly 12%, the largest shareholder.

But Bank of America Corporation's performance in the second quarter was dismal. In the first half of the year, Bank of America Corporation's revenue was $35.2 billion, down 20.36% from a year earlier, and its net profit was $75.43, down 48.54% from a year earlier.

Bank of America Corporation's profit growth rate fluctuates greatly. Bad years, such as 2008, fell by 73%, 2010 by 136%, and in good years, growth can exceed 100%.

In fact, in the first half of the year, the performance of the US banking industry has greatly changed, and Wells Fargo & Co's profits have returned to those before liberation overnight. For example, the mid-year report reported a big loss of $1.726 billion, down 114% from a year earlier, compared with a profit of $14.48 billion in the same period in 2019.

The main reason is that in the economic expansion cycle, the quality of bank assets is better and the provision is less, but in the economic downturn, credit default increases rapidly and banks make large provisions.During the subprime mortgage crisis of 2007-2011, the loan quality of the four major banks in the United States deteriorated, the net write-off ratio and non-performing loan ratio increased significantly, and the four major banks increased their provisions accordingly.

Look at the perilous provision for loan losses in the second quarter of this year.Among them, JPMorgan Chase & Co's provision has exceeded that of the subprime crisis in 2008, which shows that he holds a more pessimistic expectation for the future economic performance of the United States.

Throughout China's banking industry, the industry provision coverage is significantly higher than that of the American banking industry, and the safety pad is higher. Moreover, the current Chinese economy has repaired more than expected, significantly better than the economies of Europe and the United States.It can be seen that Bank of China Ltd. 's prudent business thinking, on the contrary, the American banking industry is much more radical.

It was not until the outbreak of the epidemic this year that provisions began to be increased. China Merchants Bank, who runs well in China, has continued to increase the provision for bad debts for many years, and the provision rate has been raised to 451%, which is much higher than Bank of America Corporation's level.

In the view of many professionals, Buffett's aggressive bottom-buying attitude of bank stocks is too optimistic, they think Buffett may have to wait several years to see a real return. I hold the same view.

Us stocks continued to rebound violently in the second quarter, with the Nasdaq hitting new highs frequently, with the S & P 500 only one step away from new highs. However, from the perspective of the 11 major industries, only half of the industries showed positive growth. At the same time, energy and finance have ushered in the worst earnings season in the second quarter, and the stock price performance is also the worst.

Even Bank of America Corporation, the best-run, is still down more than 25 per cent from the end of last year, far from regaining its lost ground. It can be seen that mainstream market funds hold a cautious attitude towards the banking industry.Furthermore, the banking industry, the mother of all industries, is in fact skeptical and distrustful of the rapid recovery of the US economy.

Now the bottom of the bank stocks, in fact, the performance-to-price ratio is not high. And with the rampant epidemic in the United States, coupled with the record debt problem, the United States is likely to have an economic crisis and a debt crisis. If unfortunately right, bank-led financial stocks will become the hardest hit by the collapse.

3、Huge amount of cash

In Berkshire's latest earnings report, there is a set of figures that attract particular attention: cash on the books reached $146.6 billion (1.0213 trillion yuan) by the end of the second quarter, an increase of $19.6 billion from the end of last year and an all-time high.

146.6 billion dollars. What level is this?

Based on the market capitalization of $207.454 billion, 41 per cent of Mr Buffett's position is cash, with only 59 per cent of the market position.

What does it mean behind Buffett's holding a huge amount of cash?

At present, the overall PE multiple of the Nasdaq has reached 60.55 times, the S & P 500 has reached 33 times, and the Dow has reached 27 times, all of which have reached the highest valuation of US stocks.

Behind the new highs of US stock valuations is not how good the macro fundamentals are, but the bubble caused by the Fed's bottomless continuous release of water.In just a few months, the Fed's balance sheet has expanded by $3 trillion, releasing water like never before.

And, at the interest rate meeting on July 30th, Powell also set the tone: the Fed will continue to release water, unabated.Of course, there will be no more aggressive expansion of US monetary policy, at best, the status quo.Just look at the freefall dollar index.

On the other hand, the American economyAfter the economic fundamentals are in a deep recession, a larger-than-expected V-shaped reversal is unlikely, and what should be more worried is that the epidemic is out of control and the economic recovery is far less than expected.

Therefore, the basis on which US stocks continue to soar is not there. Moreover, it is dangerous to continue to soar in recent months, resulting in a very big deviation between fundamentals and stock price performance. Next, it is impossible to know when the March slump will repeat itself. In fact, the epidemic in the United States is still raging, and the damage to the economy has not diminished to a great extent.

This may also be an important factor in Ba's large cash holdings.

4、The end.

The madness of US stocks is not just reflected in technology stocks that have repeatedly reached record highs. There is also some madness: Kodak, the former film king, soared 20-fold in a week, fivefold on July 30, and triggered a circuit breaker 15 times in intraday trading. These phenomena can be seen from the extreme speculation of U. S. retail investors, but also left some hidden dangers for future U. S. stocks. We should be more cautious in dealing with current US stocks.

In particular, Buffett has such a huge amount of cash, but also expressed an attitude of sailing with care.For us and other retail investors, we might as well take a good look at our positions and should not be too radical. Before the US election, there may be no shortage of black swans surrounding China and the US.