Halls of Shrewd'm / US Policy
No. of Recommendations: 4
I am admittedly late to the stock-market party. However, being retired at a rather early age with a young family, I have now ventured into stocks and bonds. Until now it was solely my own businesses, and commercial and residential real estate - still hold the latter.
Of course this means I missed potential decades of returns in things like Berkshire. However the history, the philosophy, the ethos, the way of doing business and investing is nothing short of admirable and I'm sure there's stronger words than that.
Per my 'plan' - if I can make a long term annualized *nominal* return of 6% on equities - I'd be happy as can be. Frankly, I like businesses I can understand or at least comprehend. Things like soda, insurance, great brands interest me. The latest and greatest in semiconductors or social media - my loss - it's just not my thing.
Enter BRK....past history isn't representative of the future but my goodness, I'd have done a tad better than 6% with BRK over the past decades. Question if some of the BRK long tremors here want to offer an opinion:
What happens after Buffet? Yes, he's trained and worked with a successor or 2. I guess in layman's terms: Dad is going to leave the store. Wally and the Beaver are gonna be in charge. Do we feel they'll continue things the same way? Or will it be "let's go a new direction"? And do you as investors want methods and practices to stay the same or change?
Looking at BRKs business: Honestly, I can't criticize it. Be it recession or prosperity it feels like a good place to be. Just wondering how the future looks if I were to depend on this one for some college expenses, and like I said - long term 6% yearly.
Appreciate any opinions, thanks.
No. of Recommendations: 7
What happens after Buffet? Yes, he's trained and worked with a successor or 2. I guess in layman's terms: Dad is going to leave the store. Wally and the Beaver are gonna be in charge. Do we feel they'll continue things the same way? Or will it be "let's go a new direction"? And do you as investors want methods and practices to stay the same or change?
I think it will be the same for a long time, and that's the way I want it. The Berkshire culture will be preserved.
At some point activist investors might try to force a breakup to "unlock shareholder value". If they succeed it would get them a quick buck at the expense of long-term investors.
Just wondering how the future looks if I were to depend on this one for some college expenses, and like I said - long term 6% yearly.
I'm planning on living off a self-created Berkshire dividend when I retire, which will be this year if I can learn or force myself to say no, finally. A return of 6% real should be very do-able. 4% real would keep my family in the style to which they've become accustomed (they like the good milk).
Berkshire is a great choice in taxable for a US based investor. Keeps up with or slightly outperforms the S&P500 with no taxes to pay until you choose to. I'm betting that will continue post-Buffett, but I acknowledge the risk. And hedge it somewhat by having all our tax-deferred in other things.
Regarding college costs specifically it might be worth looking into a 529 plan, depending on where your kids are right now. We started one for each kid when they were babies. Kid 1 is in college now. The 529 will cover her first degree (with scholarships), med school and might have a bit left over. No cap gains to pay. Ours use Vanguard funds.
No. of Recommendations: 2
'I think it will be the same for a long time, and that's the way I want it. The Berkshire culture will be preserved.
At some point activist investors might try to force a breakup to "unlock shareholder value". If they succeed it would get them a quick buck at the expense of long-term investors.'
Yes indeed, I agree wholeheartedly we are in fine shape. It's wonderful WEB had the vision and has essentially created dominant control of his baby and surrounded himself on the Board with a cast of incredible quality professionals and human beings with wisdom and experience who totally get it and will honor his vision for a long long time. They will always prioritize shareholder value. Activists will be wasting their time, money and energy imo. This is far from a Disney.
Although it is sad that several older Board members have recently passed, I am So Glad WEB could hand pick Chenault, Weitz, Susie, Davis, & Murphy, Jr. They all should have pretty long tenures. WEB's extended control and influence will truly last for at least a decade or two from the grave imo. Brilliant and he is willing to take any criticism so Greg might take less going forward! It's a Win Win Win.
No. of Recommendations: 0
WEB's extended control and influence will truly last for at least a decade or two from the grave
We will never know that as cherry coke and steak apparently ensure that he survives all of us, as candy does for Charlie.
No. of Recommendations: 10
Activists will be wasting their time, money and energy imo. This is far from a Disney.
The future holds many surprises, I am not above believing a change in direction could happen if there are a few years of post-Warren mediocre returns.
Jumping threads: 'Buffett' is spelled with two-T's. He has enough money to be able to afford more than one.
No. of Recommendations: 9
I'm with Goofyhoofy. The future will hold many surprises.
The odds are likely in our favor as to making more money with a disassembly of Berkshire into various units. This type of spinning out disassembly has been profitable over the years for long holding Danaher shareholders, for example.
Ted and Todd, while awesomely good investors, have not quite attained WEB's unique six sigma proficiency. Additionally, WEB's often mentioned Law of Large Numbers factoid coupled with fewer available elephant sized opportunities further biases Berkshire's future splitting up into multiple companies with each having a large market capitalization.
I plan to be along for the ride. The good news about taxation is it quiets the mind of U. S. based long term investors. If we were in Monaco, well, that would be a wholly different investment decision (an easier decision, I'd say for finding a temporarily undervalued wonderful company to transition one's Berkshire gains without consideration of taxes being siphoned off.)
No. of Recommendations: 5
I have definite opinions on this. For me, I'm 45%+ in Berkshire, 70% of which is in IRA's. I have begun selling 1% of IRA positions per quarter.
Right now, speaking for myself, I give any underperformance/mistakes a huge pass because Warren is there. I've liked what I have seen so far from Abel, albeit it is very minimal, except for his performance at the Utility.
GEICO has not been doing well versus Progressive for years- Todd has been there for a while. Running a business is hard, I get it. I give a pass to this.
I also gave a pass to KHC/IBM/COP...I just say, 'mistakes happen' - and they do, easy to forgive when the GOAT is running things.
I just know my own psychology and when, not if, a misstep happens after Warren, it will be very noisy out there, and likely why he has his wife going into the SPX. He doesn't want her to be possibly persuaded to sell.
Even by selling 1% a quarter, I'm not denting it that much, but it is a start. I'd like to get the whole position to a max of 25-30%.
I think many people, appropriately, give a ton of rope to Warren, he's earned it. Have to ask oneself, how would you react when the next CEO makes a mistake..
No. of Recommendations: 3
" I have begun selling 1% of IRA positions per quarter.
"
I suck at selling. I have never sold any of my holdings (Berkshire and others).
I have plenty of cash to live on but I must address the drawdown phase. Hard to shift one's mindset from decades of accumulation.
I would appreciate any insights into this challenge from others who are in the drawdown phase of life.
No. of Recommendations: 2
@longtimebrk'I very much relate to your sentiment regarding the challenge of drawdown phase of life.
Me:
+ 69.9 yrs old.
+ Good pension;
+ Savings to supplement spend
+ No debt
+ Soc Security begins in APL
+ A saver all my life and '
the thought of selling any BRK kills me.
Read an article this morning 'The Art & Science to Spending Money' by Morgan Housel which planted a seed. Time will tell if it germinates. Ha.
https://collabfund.com/blog/the-art-and-science-of...GLTA,
PaulnKC
No. of Recommendations: 13
FWIW, you might read the Die Broke book - circa 1998. It's free on Kindle. I read it way back then and it has influenced me. I read it early on. Probably needs updating, but the basic ideas still hold.
For background, I'm a Great Depression born child who grew up in the rural deep South. Living was not that much different from Civil War days if you lived outside the towns. I'm talking bout no running water, no electricity, wood heat, the outhouse down the hill, and growing 90+% of what you ate. So I understand the value of money and the desire for financial security.
Even so, with the Die Broke viewpoint in mind, I decided to try to make use of the financial security I developed over five decades of work - started at age 12 - to use money instead of hoard it.
In an early Berkshire meeting, I recall Munger's answer to the "usual" question back then of how do you get rich? IIRC Munger replied that the key was getting the first $100k to invest. Do so as young as possible, invest it wisely, and enjoy the fruits of compounding.
So I set out to help my family follow that advice by helping with the early marriage years of capex. Cars, home down payments, early savings for college, seed money for investing, tuition early on, etc. The deal was to help them get started early. In turn, they had the ability to save and invest early. If they don't follow through, stop.
That has worked out well for us. They've seen the benefits and we've enjoyed the satisfaction of seeing the results of our own wealth building being employed while we're still around to see it.
We've been careful to always provide for our own needs so that we would not be a burden. And to enjoy the fruits of our hard work, savings, and investing while we were still healthy enough to do so.
It has worked well for us. Put the money to work while you can see and enjoy the results. Just something to think about.
No. of Recommendations: 4
The Morgan Housel article is a good read.
We seldom sell stock. We frequently put appreciated stock into our Grantor Fund held at U.S. Charitable Trust. We then gift the funds over time to various 501.3c qualified situations mostly in our town/county/state. We usually do this moving of appreciated stock to the grantor fund in the same year we have a large tax obligation. In 2022 a stock holding was bought out. The ensuing capital tax gain was partially offset by moving some of our oldest Berkshire B shares into our grantor fund.
We also gift stock to our children and grandchild. This has been done for the past 23 years. Usually we gift stock temporarily beaten down in value. The allowed $16K per person gift per year using temporarily beaten down stock of a company is a good way to optimize future value for the recipient.
Like you, I had to start taking SS last fall and my bride has to start taking SS later this year. In three years Required Minimum Distributions will be our fate. We continue to own a business and are active in its operations, so we have income from the business. We also have rental property.
We find it is hard to change from an accumulator to a spender. The notion of a beach house or some other previously contemplated escape is no longer desired (too much work to keep up and we'd rather visit our grandchild) now that we are older (Medical records describe us as "Elderly").
It is easier to become a giver using appreciated stock via transfer to a grantor fund. Still, it is a hard decision to part with a holding likely continue increasing at 8 - 10% per year.
Good luck with your decision.
Uwharrie
No. of Recommendations: 3
"Read an article this morning 'The Art & Science to Spending Money' by Morgan Housel which planted a seed. Time will tell if it germinates. Ha."
Morgan is a great writer. His book "The Psychology of Money" is great
No. of Recommendations: 1
"We also gift stock to our children and grandchild. "
I do this as well.
My estate plan calls for the disbursement of the vast majority of the $ to my designated causes.
Will evaluate more carefully Grantor and Donor Advised Funds now.
No. of Recommendations: 7
Ted and Todd, while awesomely good investors, have not quite attained WEB's unique six sigma proficiency.
Warren has also built up a lifetime of goodwill and trust, hard to replicate by somebody who hasn't been in the spotlight or had such an engaging story for the past half century.
When he screws up he says so, which is a charming attribute in today's world. And even if/when Ted/Todd do the same, it won't be to the same effect simply because they're not Warren. The dynamic will be different, it will be harder to explain away the inevitable bungles. Not saying 'impossible', just that everything will be different in many ways, and predicting a linear extension of what we have seen is, at best, unlikely.
No. of Recommendations: 1
Good morning, is it fair to expect those who follow Buffett and Munger to work for free? No options or reasonable salaries for the next 50 years ? Seems unlikely. Perhaps 1 percent of stockholders equity annually is more realistic in total?
No. of Recommendations: 2
"Perhaps 1 percent of stockholders equity annually is more realistic in total?"
Or around $48 billion in current equity? If that happens, I think the Berkshire culture will be drastically different and perhaps, it would be time to bail from the company. As numerous insiders (including Charlie Munger, Sandy Gottesman, etc.) have indicated, Berkshire is likely to deliver better returns than the average American company only as long as the Berkshire culture remains intact.
No. of Recommendations: 0
"Perhaps 1 percent of stockholders equity annually is more realistic in total?"
Or around $48 billion in current equity? If that happens, I think the Berkshire culture will be drastically different and perhaps, it would be time to bail from the company.
Missing a digit? I see shareholder's equity of ~$464 billion end of September. I would definitely be OUT if managers were getting $4-5 billion annually. Seems a rather absurd suggestion.
They should get fair compensation for their positions, that ain't fair.
No. of Recommendations: 0
Yeah, I did miss a digit. Thanks for catching. But the gist of the response remains the same. It looks like you concur. 😊
No. of Recommendations: 0
How much do the officers and directors of our top five holdings take annually?
