Author Topic: Berkshire 2018 Annual Meeting  (Read 18250 times)

scorpioncapital

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Re: Berkshire 2018 Annual Meeting
« Reply #30 on: May 06, 2018, 12:43:20 AM »
Be happy opportunity cost lost has resulted in at least matching the sp500. It's quite a tribute that a one third pile of cash vehicle can do that...often when companies don't swing enough or make mistakes they tend to severely underperform the index which is the true disaster you need to avoid . Matching averages is not the worst fate.


tombgrt

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Re: Berkshire 2018 Annual Meeting
« Reply #31 on: May 06, 2018, 03:21:13 AM »
From NYT:

"As for Alphabet, Mr. Buffett said that he had “made a mistake.” He said he was unable to conclude that at Alphabet’s present prices, its “prospects were far better than the prices indicated.”"

Comparing this with his investment in Apple (and IBM), I wish someone would ask him his reasonings.

Good of him to own up to this. He has cost shareholders a lot in terms of opportunity cost the past decade, hate to say it but it's true. Outside the GFC Berkshire has done nothing impressive and TBH even considering that opportunity returns have not been that impressive compared to what they should have been with the "world's greatest investor" at the helm.

Munger says Buffett keeps getting better with age. I don't see it, honestly. He's still very good but I don't get the impression he or Berkshire have morphed with the times in the way that is sold. It's cool he's trying new things with Apple, maybe he'll get his old groove back sooner or later.


I'd say that is a little too negative considering size, market conditions and cash position. Ask Prem Watsa about true opportunity costs... Hell, ask most decent fund managers with a strong value bent. They'll come back in vogue at some point too. Buffett was buying in 08/09 while many were trembling with fear. And he still did some decent deals like you said. That's more than most can say. Nothing mindblowing but he has still kept up with the market and its soaring tech stocks with enormous cash levels. Maybe he got better with age but certain conditions make it very hard to see this. I'd love to see what happens if the S&P500 drops two or three years in a row! Also, selecting Todd and Ted, who both seem to be beating the market, is impressive in itself imo. They are not managing a few hunderd million...

So easy to say in hindsight that BRK did poor vs broader market. Maybe one of his biggest mistakes is not buying MSFT a few years back and going after IBM. (With IBM he fell prey to a backwards looking fallacy as someone else put it here. "They have always reinvented themselves thus they will do it again.") But who would have guessed Amazon, Google, Apple, Netflix, Facebook, ... would be where they are today. Five years ago, 99%+ of analysts, investors etc would have called you insane if you dared to predict this outcome. Do you know about many fund managers who got extraordinary outperformance vs the market? In any case, I would have slept better owning 100% BRK than 100% S&P500 in the last 9 years.

For the last 20 years, BRK has been a great stock to own in size at certain points in time. Good investors were best to trade around that. Early 2000 and 2011/2012 were two such occasions where the investment case was a no-brainer. Many didn't see it in 2000 and 2011 and I'm sure Mr Market will be blinded once again in the future.
« Last Edit: May 06, 2018, 03:38:44 AM by tombgrt »

gfp

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Re: Berkshire 2018 Annual Meeting
« Reply #32 on: May 06, 2018, 04:25:04 AM »
Cnbc has footage and other stuff from past annual meetings, not available previously.  They call it their new 'warren buffett archive' ->

https://buffett.cnbc.com/annual-meetings/

gfp

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Re: Berkshire 2018 Annual Meeting
« Reply #33 on: May 06, 2018, 04:41:35 AM »
One thing I always enjoy is when someone asks about their access to the 'dry powder' they currently show.  This year it was about insurance regulators only allowing a certain amount of dividends out of the ins. companies per year without special request/approval.  Of course, cash does have to be outside the Ins. company to buy and cancel BRK shares, but it probably isn't necessary in order to buy them.  They can be distributed to the parent and cancelled later.

But my point is that they don't want to spit out a number (Charlie has accidentally spit out, 'we could do a 150 billion dollar deal tomorrow if one came along' last year) - but they were clearly indicating that they will have no problem at all getting creative and closing an enormous acquisition if one were to be possible.  This year he mentioned partners would line up - like FFH uses OMERS and others - even though it would be unlikely that BRK would require partners.  If debt markets stay like this, obviously that can and will be used as a major lever.  And, of course, one of the reasons BRK cash seldom goes down by much - even during years with large acquisitions like PCP - is that the amount of time between a deal being announced and it ultimately closing can end up bringing in another $25+ billion in cash to Berkshire.  Float growth, maturing securities, free cash flow from subsidiaries.

Through relatively short term (2-10 years) debt issues, Buffett would have no problem "pre-spending" some of Berkshire's future earnings power on the right deal.  Compared to the current situation it would be a luxury.

And capital doesn't have to be dividend-ed out of the Insurance companies to make acquisitions.  There is no problem if NICO ends up owning another large operating business.

John Hjorth

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Re: Berkshire 2018 Annual Meeting
« Reply #34 on: May 06, 2018, 05:24:41 AM »
Total policyholders statutory surplus of this "tiny taxi insurance company" doing business out of Omaha is actually USD 128,562,565,980 at year end 2017. [ : - ) ]
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gfp

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Re: Berkshire 2018 Annual Meeting
« Reply #35 on: May 06, 2018, 05:46:41 AM »
So many of the shareholder questions were from Chinese nationals and children.  A few questions from the Chinese folks were ok - trade relations, why not look to buy chinese businesses, etc.  The worst was probably from the Chinese woman who works at a 'family office' for high net worth Chinese.  "You two would be my dream clients"  ???  why?  "Do you have family offices and what do they do for you?"  give me a break...

I have to agree with the complaint often voiced here that the quality of the questions is just not good.  Very few substantive issues about the business are being addressed.  Unfortunately the journalists and analysts aren’t helping that much - they tend to delve into the weeds rather than asking big-picture, difficult questions.

ScottHall

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Re: Berkshire 2018 Annual Meeting
« Reply #36 on: May 06, 2018, 06:48:53 AM »
From NYT:

"As for Alphabet, Mr. Buffett said that he had “made a mistake.” He said he was unable to conclude that at Alphabet’s present prices, its “prospects were far better than the prices indicated.”"

Comparing this with his investment in Apple (and IBM), I wish someone would ask him his reasonings.

Good of him to own up to this. He has cost shareholders a lot in terms of opportunity cost the past decade, hate to say it but it's true. Outside the GFC Berkshire has done nothing impressive and TBH even considering that opportunity returns have not been that impressive compared to what they should have been with the "world's greatest investor" at the helm.

Munger says Buffett keeps getting better with age. I don't see it, honestly. He's still very good but I don't get the impression he or Berkshire have morphed with the times in the way that is sold. It's cool he's trying new things with Apple, maybe he'll get his old groove back sooner or later.


I'd say that is a little too negative considering size, market conditions and cash position. Ask Prem Watsa about true opportunity costs... Hell, ask most decent fund managers with a strong value bent. They'll come back in vogue at some point too. Buffett was buying in 08/09 while many were trembling with fear. And he still did some decent deals like you said. That's more than most can say. Nothing mindblowing but he has still kept up with the market and its soaring tech stocks with enormous cash levels. Maybe he got better with age but certain conditions make it very hard to see this. I'd love to see what happens if the S&P500 drops two or three years in a row! Also, selecting Todd and Ted, who both seem to be beating the market, is impressive in itself imo. They are not managing a few hunderd million...

So easy to say in hindsight that BRK did poor vs broader market. Maybe one of his biggest mistakes is not buying MSFT a few years back and going after IBM. (With IBM he fell prey to a backwards looking fallacy as someone else put it here. "They have always reinvented themselves thus they will do it again.") But who would have guessed Amazon, Google, Apple, Netflix, Facebook, ... would be where they are today. Five years ago, 99%+ of analysts, investors etc would have called you insane if you dared to predict this outcome. Do you know about many fund managers who got extraordinary outperformance vs the market? In any case, I would have slept better owning 100% BRK than 100% S&P500 in the last 9 years.

For the last 20 years, BRK has been a great stock to own in size at certain points in time. Good investors were best to trade around that. Early 2000 and 2011/2012 were two such occasions where the investment case was a no-brainer. Many didn't see it in 2000 and 2011 and I'm sure Mr Market will be blinded once again in the future.

I really don't think that's true. I and many others have made very good returns on Facebook, Amazon and Google over the past five years. I sold out of Facebook recently - I will buy back in - held it since 2014 and had 137% gain on the position. Still have AMZN and GOOG.

I didn't miss these stocks and a lot of people on these forums think I'm one of the biggest idiots on here. I beat Buffett at growth investing, so did a lot of others on this forum TBH. He owns up to his mistake and there's no shame in making mistakes, but to say that 99% of people couldn't figure those stocks out seems a little silly to me.
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Cigarbutt

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Re: Berkshire 2018 Annual Meeting
« Reply #37 on: May 06, 2018, 07:04:19 AM »
Humble contribution.

Investment is like a race and you have to choose the vehicle and the driver.

It is impossible to maintain a permanent edge. ScottHall's comments may be right that the time has come but (politely submitted) the comments remind me of an article I read in 1999 titled: "What's wrong, Warren?" when I was trying to define the rules of the race.

At a time when the value of moats is questioned, if there is a message that will stay, even after Mr. Buffett is gone, it is that Markets can sometimes be wrong and, in spades, spectacularly so.

Borrowed from "Get your groove back":

"Looking at the past in the rear view mirror,
 Moving so fast I've never seen clearer,
 Now I get a new way to feel ten times better,"

Here to learn but to win a race, you have to try to finish the race, even if there is no finish line.

tombgrt

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Re: Berkshire 2018 Annual Meeting
« Reply #38 on: May 06, 2018, 07:28:01 AM »
From NYT:

"As for Alphabet, Mr. Buffett said that he had “made a mistake.” He said he was unable to conclude that at Alphabet’s present prices, its “prospects were far better than the prices indicated.”"

Comparing this with his investment in Apple (and IBM), I wish someone would ask him his reasonings.

Good of him to own up to this. He has cost shareholders a lot in terms of opportunity cost the past decade, hate to say it but it's true. Outside the GFC Berkshire has done nothing impressive and TBH even considering that opportunity returns have not been that impressive compared to what they should have been with the "world's greatest investor" at the helm.

Munger says Buffett keeps getting better with age. I don't see it, honestly. He's still very good but I don't get the impression he or Berkshire have morphed with the times in the way that is sold. It's cool he's trying new things with Apple, maybe he'll get his old groove back sooner or later.


I'd say that is a little too negative considering size, market conditions and cash position. Ask Prem Watsa about true opportunity costs... Hell, ask most decent fund managers with a strong value bent. They'll come back in vogue at some point too. Buffett was buying in 08/09 while many were trembling with fear. And he still did some decent deals like you said. That's more than most can say. Nothing mindblowing but he has still kept up with the market and its soaring tech stocks with enormous cash levels. Maybe he got better with age but certain conditions make it very hard to see this. I'd love to see what happens if the S&P500 drops two or three years in a row! Also, selecting Todd and Ted, who both seem to be beating the market, is impressive in itself imo. They are not managing a few hunderd million...

So easy to say in hindsight that BRK did poor vs broader market. Maybe one of his biggest mistakes is not buying MSFT a few years back and going after IBM. (With IBM he fell prey to a backwards looking fallacy as someone else put it here. "They have always reinvented themselves thus they will do it again.") But who would have guessed Amazon, Google, Apple, Netflix, Facebook, ... would be where they are today. Five years ago, 99%+ of analysts, investors etc would have called you insane if you dared to predict this outcome. Do you know about many fund managers who got extraordinary outperformance vs the market? In any case, I would have slept better owning 100% BRK than 100% S&P500 in the last 9 years.

For the last 20 years, BRK has been a great stock to own in size at certain points in time. Good investors were best to trade around that. Early 2000 and 2011/2012 were two such occasions where the investment case was a no-brainer. Many didn't see it in 2000 and 2011 and I'm sure Mr Market will be blinded once again in the future.

I really don't think that's true. I and many others have made very good returns on Facebook, Amazon and Google over the past five years. I sold out of Facebook recently - I will buy back in - held it since 2014 and had 137% gain on the position. Still have AMZN and GOOG.

I didn't miss these stocks and a lot of people on these forums think I'm one of the biggest idiots on here. I beat Buffett at growth investing, so did a lot of others on this forum TBH. He owns up to his mistake and there's no shame in making mistakes, but to say that 99% of people couldn't figure those stocks out seems a little silly to me.

Maybe I didn't make clear enough what I meant exactly. There is a difference between figuring some of these stocks out and predicting that they would be 5-10 baggers from 2013 levels. I'm not stating that 99% didn't figure these out, I'm saying that most people would have laughed in your face when you would have claimed, for instance, that Netflix would have a $140B market cap in early 2018. 99% seems about right to me, but the number was meant more to make a point. Could be 95%+ just the same. My point is that sentiment was véry different back then and that it was not easy to predict this outcome. If you and others did, you guys are eithers very bright or very lucky. I remember you buying FB a few years back, so congratz! (As an aside: I wouldn't assume the average money manager is on par with the brighest on this forum tbh. Or they might be but have various reasons (career risk etc) not to act on it.)

Would love to see if we could find more than a handful of fund managers who have, in the last 9 years, either: 1) trailed the S&P500 with an equal cash balance on average; 2) outperformed the S&P500 with >10b in assets. I'm also very interested to see how these managers will fare from now until after the next stock market slump versus Buffett, Todd and Ted. Somehow I feel I already know the answer.

Anyway, I think we both agree that Buffett is still very good but that he made some mistakes. So not really a big difference in opinion. Given the circumstances I just believe these mistakes are understandable and minor. Buffett isn't omniscient.


« Last Edit: May 06, 2018, 07:30:40 AM by tombgrt »

ScottHall

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Re: Berkshire 2018 Annual Meeting
« Reply #39 on: May 06, 2018, 07:47:44 AM »
Humble contribution.

Investment is like a race and you have to choose the vehicle and the driver.

It is impossible to maintain a permanent edge. ScottHall's comments may be right that the time has come but (politely submitted) the comments remind me of an article I read in 1999 titled: "What's wrong, Warren?" when I was trying to define the rules of the race.

At a time when the value of moats is questioned, if there is a message that will stay, even after Mr. Buffett is gone, it is that Markets can sometimes be wrong and, in spades, spectacularly so.

Borrowed from "Get your groove back":

"Looking at the past in the rear view mirror,
 Moving so fast I've never seen clearer,
 Now I get a new way to feel ten times better,"

Here to learn but to win a race, you have to try to finish the race, even if there is no finish line.

More about investing being like racing, for those interested: http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/sorry-warren!-another-year-of-dragging-ass/
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