No. of Recommendations: 26
I’ve been thinking a lot about what you’ve pointed out, Tex, and there is wisdom and you’ve cited real causes for concern. Berkshire’s flexibility is just one of the issues here as well as many operational challenges you’ve outlined, successor concerns, etc..
But sometimes I wonder..and I ask myself this all the time…is it MY outlook that’s less certain or rosy than the business I own? Is it MY timetable that,understandably , takes precedent..or worse, darkens my outlook or analysis?
I don’t mean to go all Dr. Phil on you lol…but when we own a disproportionate amount of OUR net worth in 1 company along with OUR life expectancies….isn’t it more an issue about US—rather than Berkshire?
We have a company with Fort Knox balance sheet, the most capitalized business in US history with the largest margin of safety perhaps anywhere…, but the real RISK as you point out, of serious INTERMEDIATE fumbles or underperformance for several years. Berkshire is constructed to handle major miscues and investment blunders. That’s why it’s so frustrating in risk-on markets focused not on Fort Knox and risk but on rosy future dreams. Berkshire’s long term investment timetables have not changed-but OUR life timetables have shrunk a lot. That is US —not them.
Serious problems at major operating companies ARE happening and WILL occur in the rosiest of outlooks. Even with big holdings this is part of the game contextually. In stock picking, 10 stocks have provided most of the gain of Warren’s 400+ lifetime stock picks. Mediocrity will absolutely thrive most of the time—in the best market crushing portfolios. 2 Home Runs in 10 ABs get you to Cooperstown. A reminder of the futility of people who piggy back Buffett’s picks. Context is everything.
30 years ago we’d have said fine—we can live with that. But it’s OUR lack of diversification, OUR personal lifespans, and OUR Estate plans that have us worried. Berkshire will find an elephant —but maybe not in OUR lifetime. And that may work out marvelously—for the company. The bigger timeline issue there may be OUR mortality over Berkshire’s elephant hunting timetable. AS OUR clocks tick,Berkshire at our present holdings level, becomes increasingly riskier. So, ironically, I’m in agreement about we what WE need to do and what WE probably need to be concerned about. Berkshires timetables have not changed. But ours have. Would Warren have better advice for us—than we have for him?
FWIW I don’t buy the size as an obstacle argument at all. We are capitalized a third of a few single business…and WE own 100+ of them. Find an Apple every dozen years and you’re fine. Market Cap is no excuse. At Nvidia, Microsoft, Apple cap—sure..big worry but not us. The Apple holding contributed more to Berkshire than I’d ever imagined. Get the guts to go all-in when only rarely certain and you can move the needle easily at our market cap.
Look, I may be entirely wrong. My dream is to talk with the smartest person in the world who thinks everything I believe is rubbish. I want to chat with that person. Jim usually steps up in that role lol (not the rubbish part but the smart part)…
