No. of Recommendations: 1
Let’s say, as a thought experiment, that your margin is capped at 10%.
Let’s also say you are smart and have found a way to increase your sales dramatically, either by finding new customers, getting more business from current customers, or stealing customers from competitors.
Is that realistic for a giant insurance-utility-railroad company?
One thing I neglected to mention, of course, is leverage due to float, which should goose up the stock portfolio performance. But that can only happen if the money is in stocks and not accumulated as cash. I realize that valuations are once again in nosebleed territory, and Berkshire would probably get a much better opportunity to invest in that cash. Nonetheless, that would be a one time boost. The motley collection of stocks that Berkshire holds, assuming they don't swap out most of them, is again unlikely (IMO) to outperform the entire universe of US or world stocks.
