Berkshire Hathaway - thoughts?

Thrugelmir

sebtomato said:

aroominyork said:

	1 year	3 years	5 years	10 years
Berkshire Hathaway	20%	52%	99%	408%
North America	6%	45%	80%	280%
Global	-1%	32%	54%	175%

47% in Apple and most of the rest in Bank of America, Coca-Cola, American Express and Kraft Heinz is conviction investing on steroids, but they seem to know what they are doing.

Warren Buffet has advised people to get an S&P500 tracker instead of Berkshire Hathaway shares, so his confidence that the good past performance will be repeated in the future is low.

At a point you become so big you are the market. One day BH will be split to realise value. 

One minute investors ridule Buffett the next they love him. Investors are so fickle. Meanwhile BH continues to invest as it has always has done sticking to it's core principles as set out by WB's mentor, Benjamin Graham. 

Prism

sebtomato said:

aroominyork said:

	1 year	3 years	5 years	10 years
Berkshire Hathaway	20%	52%	99%	408%
North America	6%	45%	80%	280%
Global	-1%	32%	54%	175%

47% in Apple and most of the rest in Bank of America, Coca-Cola, American Express and Kraft Heinz is conviction investing on steroids, but they seem to know what they are doing.

Warren Buffet has advised people to get an S&P500 tracker instead of Berkshire Hathaway shares, so his confidence that the good past performance will be repeated in the future is low.

What he said was that the majority of people should get an S&P 500 tracker. He does not follow that advice himself of course and as it happens Berkshire shares have outperformed the S&P 500 from when he gave this advice. Most people are not good investors - he, however is.

aroominyork

I thought it was his advice to his wife for after he shuffles off this mortal coil. Maybe it is meant as a clue not to trust whoever oversees BH in his and Charlie Munger's absence!

Steve182

BH is now just too big to find enough opportunities to invest the vast sums required in new growth companies to make a difference and significantly outperform the market...

Prism

Steve182 said:

BH is now just too big to find enough opportunities to invest the vast sums required in new growth companies to make a difference and significantly outperform the market...

I wouldn't say that BH has ever been in the market for new growth companies. It outperforms by investing in reliable quality companies - more slow burners.

adindas

Comparison of BARK-A, SMT.L, S&P500 how they perform and and draw your conclusion. Warren Buffet beat the market a few decades ago before many high growth stocks emerge.

In the last few month since December last year value beat growth stock. But wait until the situation is back to normal, inflation is under control, no more uncertainty I very much doubt if BARK-A could ever beat the market in the next decade.

Steve182

Prism said:

Steve182 said:

BH is now just too big to find enough opportunities to invest the vast sums required in new growth companies to make a difference and significantly outperform the market...

I wouldn't say that BH has ever been in the market for new growth companies. It outperforms by investing in reliable quality companies - more slow burners.

Yes, that's how it is now, but in 70's, 80's and 90's its phenomenal growth was not achieved through investment in slow burners.  

Edited to say (ask) - 

If the above statement is wrong, why can they now no longer find the quality, reliable slow burners that achieved such phenomenal growth in these past decades?

aroominyork

adindas said:

In the last few month since December last year value beat growth stock. But wait until the situation is back to normal, inflation is under control, no more uncertainty...

'Back to normal' is not low inflation and growth powering ahead of value. That is an aberration of the last decade+ caused by, mostly, QE and cheap money. The 'normal' of the coming decade could look very different. (I may be wrong but for once Thrugelmir might agree with me.)

Thrugelmir

Steve182 said:

Prism said:

Steve182 said:

BH is now just too big to find enough opportunities to invest the vast sums required in new growth companies to make a difference and significantly outperform the market...

I wouldn't say that BH has ever been in the market for new growth companies. It outperforms by investing in reliable quality companies - more slow burners.

Yes, that's how it is now, but in 70's, 80's and 90's its phenomenal growth was not achieved through investment in slow burners.  

WB bought a 10% stake in Coca Cola (that he still holds to this day).  Reliable well managed moated company that churns out cash whathever the weather. Simple business model that's easy to understand. Coca Cola itself dates back to 1892.

adindas

aroominyork said:

adindas said:

In the last few month since December last year value beat growth stock. But wait until the situation is back to normal, inflation is under control, no more uncertainty...

'Back to normal' is not low inflation and growth powering ahead of value. That is an aberration of the last decade+ caused by, mostly, QE and cheap money. The 'normal' of the coming decade could look very different. (I may be wrong but for once Thrugelmir might agree with me.)

When I said back to normal, it does not mean people life back to normal, but the stock market is back to normal e,g bull market (the default of the stock market), less FUD, less volatility, the war in Ukraine is over, controllable inflation and interest rate.

Here is what the relationship among interest rate hike & Nasdaq QQQ, high growth stocks.

https://youtu.be/P70nJvMN6xY

This was broadcasted  Jan 13, 2022 CNBC Television. Interest rate increase by 1% correlate to about 10% down in Nasdaq QQQ (growth stocks). said this analyst. About the figure of down 10% correlation, I am not quite sure at that time. But people could definitely see that there is a good correlation between the two. And Now April 29.what happen is worse. Nasdaq QQQ, S&P500%, DJIA was already below the correction territories since a while ago.

I do not know whether you are aware or not, QE  happen during the COVID-19 pandemic lock down, not since decades ago. where they were a lot of money printed to buy assets and distribute pay cheque to people. These is what has caused the high inflation which in turn trigger the high interest rate. If they did not do QE  during the COVID-19 pandemic lock down many of the companies which does not earn revenue at that time would go bankrupt.

The FED has now stopped printing money, assets buying. Beside increasing interest rate 50 basis point a few times a year, FED has even planned to start offloading their assets

In the high interest rate environment, high growth stock especially with reasonable number of debt will suffer. That is what you see in the current bear market where many of debt were decimated some are down -50%

If you want to get the fact right you will need to read from the right authoritative source such as CNBC, Bloomberg, Yahoo Finance, CNN finance, Seeking Alpha, Market beat etc.