snowglobe

How does Berkshire get taxed on dividends received from its public market investments such as AAPL. Does 50% of dividends received get taxed at the 21% corporate tax rate? Here, it says: A US corporation generally may deduct 50% of dividends received from other US corporations in determining taxable income. The dividends received deduction (DRD) is increased from 50% to 65% if the recipient of the dividend distribution owns at least 20% but less than 80% of the distributing corporation. https://taxsummaries.pwc.com/united-states/corporate/income-determination#:~:text=Dividend income,80% of the distributing corporation. Warren is really fighting an uphill battle, with gigantic positions he can't move in and out of, and a hefty tax bill to fight.

I think it's all about tail risk of the permanent variety (not volatility). Buffett's performance among many other things can be accounted for by a simple mantra: "leverage sure things and be patient until you're sure". The best stocks in the SP500 have done about 25%-30% compounded over the last 10 years in a raging bull market (except for some true outliers TSLA etc.). Realistically, a handful of stocks that do 15% plus some modest leverage is good enough to achieve a really good performance. So position sizing to me is really dependent on how the distribution of outcomes look for any particular stock. Humans generally have a hard time mentally calculating geometric means, but this is crucial for investing, so I think getting some intuition via some Monte Carlos rollouts is a useful exercise.

Munger said "There'll be one big advantage for the shareholders that pay taxes. The Berkshire shareholders - even if we just match the S&P we'd be way ahead after taxes". I'm not understanding the mechanism here. Why is this true? If BRK.B matches SPY, and I incur a capital gain on both of them, and I have to pay capital gains tax on both of them, how are the Berkshire shareholders ahead on an after-tax basis? Can someone explain please?