No. of Recommendations: 8
Imo, if Buffett saw a 32 bid for the entire block, he sells in a heartbeat. There is no excuse for that error.
I agree there is no excuse for the error.
But I'm less convinced about the selling--Mr Buffett seems happy enough with them. He wasn't a seller in Q1 at prices in the high $30s, possibly even a buyer, and the bond portfolio problem was already plain to see on the balance sheet for anyone as astute as he.
Maybe for Berkshire it's a good pick as a perpetual bond substitute able to soak up a lot of capital, which suits portions of Berkshire's portfolio. A buyer today gets a 3% yield that will almost certainly keep up with GDP over the long haul.
Too big to fail, even if they're not too big to be dumb sometimes.
As an aside, I think we may have seen the end of Berkshire's equity portfolio being an outperformer, except perhaps down in the rounding zone.
Given the magnitude of the numbers involved, the Apple rocket boost over the last few years was probably the last opportunity for a win big enough to be material.
So maybe the portfolio goal is merely making a steady income as any prudent insurance company might.
Future outperformance is most likely to come from avoiding stuff to which bad things might reasonably be expected to happen, and working hard never to overpay.
Jim
