OK, that article is dated March 10, 2008. With the benefit of hindsight I'd say that it did not age well. It also doesn't make sense. In my opinion the article doesn't even make a case to short BRK. A reason not to own it, maybe, but not a short. The only bit that actually carried some weight was valuation. In March 2008 BRK was trading at 1.75 book. That was definitely pricey and in my view overvalued somewhere in the range of 15-25%. But then in March 2008 pretty much everything was overvalued.
Those that were worried about growth back then consider this. In the 10 years that followed Berkshire grew itself by 150%. Assets in q1 2008 were 281 Bn. In q1 2018 they were 703 Bn. And they did that in a very conservative way. That's impressive! Even more impressive was GEICO. Q1 2008 premiums - 3 Bn. Q1 2018 Premiums - 8 Bn 167% growth.
When it comes to Berkshire, I don't even mind if the company somewhat under-performs the S&P. When you're investing you're getting paid to take risk. In my view Berkshire's risk is below the S&P risk. If it somewhat over-performs the S&P I'm getting paid handsomely for the risk I'm taking. But then I'm probably not as greedy as some on you.
Nice historical perspective. Thanks for doing the work.
I don’t agree with the statement BRK’s risk is below the S&P. I define risk as the possibility of loss of principal and I consider the probability of BRK going to zero much bigger than the S&P. Having said that, I don’t have any investment in the index and more than 50% of my portfolio in BRK.
Shorting is risky business and shorting something as profitable and solid as BRK more so. The right question is not if this is the right time to short Berkshire, I think it’s not. The appropiate question is if BRK may suffer as a company once WEB is no longer at the helm or alive, and that probably is going to happen during the next 10 years.
BRK is less attractive because is huge and compounding at this size is not that easy, but those who are familiar with the concept of antifragility will conclude that this is as antifragile as a public company may get!