^^^^This
Warren buffett has a huge, nearly unsurmountable advantage in two areas - firstly that he is more experienced than his competitors, and secondly the fact that his company is structured with the competitive advantage of zero cost float. And yes, he does have an advantage in analyzing information - he is far better at it than most of his competitors.
A more competitive environment can erode your edge, it does not eliminate it. If you think that his only advantage is to “influence the media”, as Blake would say, “LMAO”.
I don’t think anyone said he’s not good at what he does. He’s just disingenuous.
WB fanboys > Apple fanboys
^ Nope, ohai clearly stated that his advantage is “reputation and ability to influence the media” rather than actual skill in investment analysis, which is ridiculous.
His personality traits and political commentary are a totally different discussion.
My 2 cents say that BRKA’s success has really come from better manangement of the companies he buys and reallocating cash from profitablecompanies to those with higher growth potential under the BRKA umbrella.
Additionally, BRKA isn’t mutual fund. So when money pours into a mutual fund it causes net inflows for the PM’s to spend… when money pours into BRKA it causes an increase in price multiples. If WB were a stock picker I doubt he’d do any better than the rest of the mutual fund universe.
WEB, in fact, made his reputation as a stock picker and deservedly so. He has done better than most mutual fund managers for the last 50 years, running an extremely concentrated portfolio. What more does he have to do to prove his abilities?
Also, his attitude always has been, “owning stocks equals owning parts of a real business, not pieces of paper.” So his acquisitions of stock alone (e.g. WFC, IBM) or whole businesses (e.g. BNSF, Lubrizol, Marmon) involve the same investment process.
He bought AMEX in 70s, KO in 80s, WFC in the 90s and IBM last year. In the first 3 cases, he has clearly outperformed mutual funds. In fact there are very few companies that have done as well as Berkshire for their stockholders, in spite of a lack of dividend. I believe Fastenal and one of the banks (USB?)
Please keep hating, don’t educate yourselves about Buffett.
Guys like you allow me to accumulate BRK’B at barely above the buyback threshold. So, thank you!
Oh man.
Asked by an audience member if returns such as those posted by Berkshire Hathaway Inc. Chief Executive Officer Warren Buffett…are the product of luck or talent, Taleb [Nassim Nicholas Taleb, author of “The Black Swan”] said both played a part. If given a choice between investing with Buffett and billionaire investor George Soros, Taleb also said he would probably pick the latter. “I am not saying Buffett isn’t as good as Soros,” he said. “I am saying that the probability Soros’s returns come from randomness is much smaller because he did almost everything: he bought currencies, he sold currencies, he did arbitrages. He made a lot more decisions. Buffett followed a strategy to buy companies that had a certain earnings profile, and it worked for him. There is a lot more luck involved in this strategy.” —Bloomberg Businessweek, September 25, 2010
It seems like a lot of people pretty much hit it on the head on here. The first book on investing I ever read was stocks for the long run by jeremy siegel. I think I was a senior in high school, but I was amazed at how the returns of various countries matched the us over the past 100 years. They were pretty much in tandem. I would have thought previously that the US market would have outdone certain European markets, but they were all pretty much inline, with certain countries deviating of course. I think there is also a chart in the L3 CFAI material this year going over returns in the equity markets over the last 50 years for various countries and they are all pretty much in line. Taking that into consideration, I think geography is not all that important when it comes to returns. Buffett says a lot of things that I don’t think he really believes, but I think his whole mantra on focusing on good businesses and not picking investments based on location a true belief. I’ve never been all that interested in analyzing the market from the macro environment, but it seems to me that returns are largely determined by interest rates. It also seems that the 18 year hypothesis holds up real well. For instance from 1966-1982 Nominal GDP increased a little over 410%, but the DJIA hovered around 1,000 the entire time. The prime rate started at around 5% before finally topping out at 20% in 1980 or so. The market roared in the 80’s and 90’s because of innovation and speculation, but seldom do people ever talk about the pent up growth potential as the stock market was not able to reflect the growth of the economy due to mutliple contraction as the rf continuously rose. Also take in the effects higher debt costs have on margins across the board as not all companies can pass on their costs to customers and you have a gloomy environment for equities. The exact opposite is true when rates are going down. It will be interesting to see how this low interest rate environment we’ve been in for the last five years plays out on equity prices in the next 10-15 years.
I guess we should just delete every thread that discusses the market. Let’s juste paste what WEB thinks. Case closed.
This is not true. Buffett has done a range of different trades, he’s done special situations like spinoffs, merger arbitrage, he’s done net/nets and deep value, he’s done distressed assets, all in the early part of his career, later on in life did he start focusing on using his low cost float to buy up high quality firms with moats.
Buffett likes to put on a persona of an old-school midwestern guy, but make no mistake, he’s a well rounded investor.
I read one of Bogle’s book (written in 2002 I believe) and he looked back at the returns from the US, Europe and Japan over a 40 year period (1960-2000). Taking currency into account, they all ended up having the same return over 4 decades. Sure, there were some decades dominated by one or the other (Japan 1980s, US 1990s), but at the end of the finish line they gave investors the same return.
Ok let’s get back on topic, former trader has an interesting point, he’s basically arguing that we’ve had a massive bull run in equities till 2k, and we’re experiencing a major case of mean reversion right now. Although, you’re also bearish on fixed income, so is your optimal allocation cash?
My guess - we’re in a period of deleveraging buttressed by monetary easing, and these periods tend to be bullish for equities. Quantitative easing will end in theory when economic growth starts to strengthen sustainably, which is also very bullish for equities. As a result, my expectation is that we’re going to be in a multi-year bull market, especially if Europe itself starts on a program of QE.
Taleb is baffoon that shouldnt be quoted in any context, thanks for complying
^Word! (though it’s “buffoon,” but I’d agree with “baboon” if that’s what you meant to say.)
As I mentioned in my post, I’m in equities since early 2010. My timeframe is 40 years and I want to accumulate at these levels - dollar cost averaging - before the next big bull run rises all ships (i.e. bull run is more than 100% return, more like 500%-1000% return).
I’m almost 90% equities because of my time horizon. I’m sure some people here can make the case for commodities but I don’t know much about it.
I copied/pasted that just because I know this forum loves him 
Has WB specified he only wants rises in wage income? That seems a little more nuanced than “rich people should pay more taxes” since the people who are insanley rich, as you say, typically pay lower taxes. There was speculation not long ago (end of 2012) that dividends could be taxed as ordinary income, but instead they just went from 15% to 20% (although who knows what comes out of continuous government wrangling). I wrote a white paper on previous tax changes effects on equities.
Speaking of Nassim Taleb, he is doing an AMA on reddit today at 4pm. Should be interesting… or very frustrating…