I remember reading somewhere that Buffett said that he saw that the more mills Berkshire had the less profit it made, so the rational thing to do was close mills. Genius ;-)
Didn't happen that way. Buffett noticed Berkshire's stock went up every time they sold a mill-- so he started buying it before it planned to sell another mill to make a quick buck.
Then his dad died and Berkshire management slighted him by an 1/8th. So he used other people's money to buy management out in what he admits was an irrational mistake. He closed down his entire partnership at the same time. He actually lost a lot of money keeping Berkshire's mills afloat as opposed to just reinvesting all the money in other ventures, but felt a personal obligation to the workers.
Berkshire's history pre-Warren isn't that noteworthy:
Berkshire is known to be one of Warren Buffett's worst investments. The Berkshire textile company agreed to sell to Warren, but broke its word and raised its asking price at the 11th hour, which pissed Warren off, so he paid more than he should have to get control of the company to get back at them, even knowing that textiles were a declining industry given offshoring. Warren eventually had to shut everything down and lost a bunch of money. Warren calls it one of his biggest investment mistakes and kept the Berkshire name for his overall investment vehicle to remind himself about that blunder, so it's a little silly to think of the modern Berkshire as a continuation of the original Berkshire.
So was Berkshire invested in insurance before Buffet acquired them? Maybe he saw that the insurance side was worth more than the textiles would be. Acquire the company just for the insurance side, and wound down the textile side. Never letting anyone know his true intention was to go into insurance.
Someone in theory could have bought Berkshire in 1930 at a quarter and then held until $50k-100k had he lived long enough.
I think this is the greatest CAGR of any investment except Bitcoin.
Finally by 1998 the second derivative goes negative, with brk.a more closely tracking the S&P 500 thereafter. The era of was over. But it was a great run. I think Buffett's mistake, as he later admitted, was not pivoting to tech stocks in the early 2000s. Missed out on Amazon, Facebook, Google, Apple. Same for Walmart, which he missed. Had he done so, the CAGR from 1969-1999 could have been sustained for another 2 decades. Mr. Buffett now owns Apple.
Nothing can grow at 30% for very long, even if you don't make any mistakes. I think the tech bit is painting with too broad strokes.
Google-- he's said investing there should have been obvious because GEICO was spending a lot and still using Adwords very profitably.
Amazon-- He's praised Bezos but stopped short of calling it a missed investment AFAIK.
Facebook-- I don't think it's ever mentioned anywhere in BRK meetings.
Netflix-- He's said it's hard to call winners in the streaming space, although BRK does have a sizable paramount position.
Microsoft-- He's said he missed this initially, he's also said he's avoided investing in the past because he was close to Gates and concerned any investment timing wouldn't be beyond reproach. Later, BRK took a position in Activision/Blizzard that was very controverisal as WEB had predicted, which was claimed to just be an arbitrage position.
Huh, kind of weird to think about the holding company still being the same corporation and that it was created from the merger of a bunch of old-timey manufacturing companies. That’s a lot of history!
I wonder if Berkshire Hathaway-the-corporate-entity has all kinds of weird historical liabilities from whatever horrible environmental practices early 20th century textile mills engaged in.
There was a period of time not too long ago when every big tech company fancied itself as being a "holding company" (Alphabet being the most prominent example). They thought that just like Berkshire their original function would be forgotten as all other bets around it bore fruit and expanded exponentially. That strategy didn't quite work out for any of them. Turns out creating and sustaining one successful company is a miracle, let alone a dozen.
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[ 3.2 ms ] story [ 46.3 ms ] threadI remember reading somewhere that Buffett said that he saw that the more mills Berkshire had the less profit it made, so the rational thing to do was close mills. Genius ;-)
Then his dad died and Berkshire management slighted him by an 1/8th. So he used other people's money to buy management out in what he admits was an irrational mistake. He closed down his entire partnership at the same time. He actually lost a lot of money keeping Berkshire's mills afloat as opposed to just reinvesting all the money in other ventures, but felt a personal obligation to the workers.
Berkshire is known to be one of Warren Buffett's worst investments. The Berkshire textile company agreed to sell to Warren, but broke its word and raised its asking price at the 11th hour, which pissed Warren off, so he paid more than he should have to get control of the company to get back at them, even knowing that textiles were a declining industry given offshoring. Warren eventually had to shut everything down and lost a bunch of money. Warren calls it one of his biggest investment mistakes and kept the Berkshire name for his overall investment vehicle to remind himself about that blunder, so it's a little silly to think of the modern Berkshire as a continuation of the original Berkshire.
More: https://www.cnbc.com/2010/10/18/cnbc-transcript-warren-buffe...
Even more in the book "The Snowball: Warren Buffett and the Business of Life".
I think this is the greatest CAGR of any investment except Bitcoin.
Finally by 1998 the second derivative goes negative, with brk.a more closely tracking the S&P 500 thereafter. The era of was over. But it was a great run. I think Buffett's mistake, as he later admitted, was not pivoting to tech stocks in the early 2000s. Missed out on Amazon, Facebook, Google, Apple. Same for Walmart, which he missed. Had he done so, the CAGR from 1969-1999 could have been sustained for another 2 decades. Mr. Buffett now owns Apple.
Google-- he's said investing there should have been obvious because GEICO was spending a lot and still using Adwords very profitably. Amazon-- He's praised Bezos but stopped short of calling it a missed investment AFAIK. Facebook-- I don't think it's ever mentioned anywhere in BRK meetings. Netflix-- He's said it's hard to call winners in the streaming space, although BRK does have a sizable paramount position. Microsoft-- He's said he missed this initially, he's also said he's avoided investing in the past because he was close to Gates and concerned any investment timing wouldn't be beyond reproach. Later, BRK took a position in Activision/Blizzard that was very controverisal as WEB had predicted, which was claimed to just be an arbitrage position.
I wonder if Berkshire Hathaway-the-corporate-entity has all kinds of weird historical liabilities from whatever horrible environmental practices early 20th century textile mills engaged in.