2025-10-25
Warren Buffet warn us that a big krash is going to come soon.
En of 2025 Warren Buffett makes a deep concern that the current market, while appearing strong, "rhymes" with the conditions of 2008, hiding a structural fragility. The core message is that investors must understand the "why" of the fragility, not just guess the "when" of a crash.
Addiction to Cheap Money: Following 2008, 15 years of zero interest rates and extensive money printing led to an explosion in debt (corporate, government, and consumer). Investors became dependent on the belief that money would always be free and the Fed would always intervene.
Impatient Psychology: The market is now driven by momentum, algorithms, and news/tweets rather than fundamentals. Over 40% of the market is influenced by investors who have never experienced a real downturn. Margin debt (borrowing to invest) is near all-time highs, repeating the leverage cycles seen in 1999 and 2007.
The Illusion Economy: Surface indicators (GDP, unemployment) look fine, but households are struggling with record credit card debt and low savings.
While 2008 was about leverage and housing, the current threat is defined by Confidence and Speed.
Speed: Today's digital markets mean that fear is amplified by algorithms and social media. A simple viral tweet can trigger a digital bank run overnight (as seen with Silicon Valley Bank), making the system's "plumbing" faster than human reason.
Corporate Debt Masquerading as Strength: Companies used cheap debt for massive share buybacks, artificially boosting earnings per share. As rates rise, this debt becomes a heavy liability.
Silent Liquidity Trap: Money isn't flowing freely; it's "stuck" in short-term instruments because investors are hesitant to commit long-term, sensing an unstable heartbeat in the market.
Patience is now a competitive advantage.
Build Cash, Not Fear: Hold 20% to 30% in cash equivalents. Cash is not hiding; it is optionality—ammunition to buy when opportunities arise during a downturn.
Simplify: Stick to your "circle of competence." Invest only in businesses with strong balance sheets, real cash flow, and products that would survive chaos.
Think in Decades: Ignore daily headlines and noise. Wealth is built through time, not timing. A downturn is not a disaster; it's a discount, revealing who was speculating and who was investing.
The Final Warning: The current era, especially around AI, is one of exaggeration, not just innovation. Like the dot-com era, most companies will disappear. Discipline now will determine who comes out ahead when the tide eventually goes out.
2035-10-29