No. of Recommendations: 12
It is hard to see how a $1.1 trillion conglomerate dedicated to growing by shrewd acquisitions can prosper when there are only 220 companies with market caps over $100b, or 110 US companies, Berkshire’s usual hunting ground.
It´s all about Warren´s/Charlie´s mantra "buy great companies at decent prices" (or similar; my bad memory), whether that be whole companies or shares thereof.
Yes, apparently since years Warren doesn´t see opportunities to really move the needle meaningfully for a company of Berkshire´s size --- not surprising in an environment of since so many years markets only rising and getting more expensive.
But I see it historically, always have to think on Warren´s "I feel like an oversexed guy on an Island", replaced later by "... in a whore house". Maybe somebody can help me out with the dates he said that. For me it means nothing is going up forever and reminds me on what always differentiated Warren from mere mortals: Infinite patience.
- 1950-1965 the S&P went up for a full 16 years
- 1966-1981 up and down, effectively nowhere for the next 16 years
- 1982-2000 up again in a straight line for another 18 years
- 2001-2013 was required, 13 years, to reach that level again and to continue to rise from thereon --- with big swings during those 13 years, opportunities to deploy mountains of cash
- 2013-2025 up again for 13 years in a nearly straight line
- ???
I see no reason why these secular cycles shouldn´t apply any longer***.
If they do still apply it´s likely that a secular bear cycle is coming (or as I suspect already started). Then Warren/Abel probably will have many years with opportunities to invest even that huge cash hoard in a way which will ensure Berkshire´s profitability for some more decades (though I am not sure whether that will still benefit me or only my heirs :)
It´s a longterm game and nobody is better in that than Warren - and hopefully his students at the HQ. I am therefore willing to be a little patient myself and to give them some more years instead of becoming impatient and saying "Goodbye" to Berkshire at maybe exactly the wrong point in time.
