MCR

I've had the sense of late that more times than not over the past month or so Berkshire's daily price moves appear more out of sync with the broader market than what I've seen in the past few years. Out of curiosity, I went to Portfolio Visualizer to look at the correlations for daily returns between BRK.B and SPY. I set the rolling correlations to 20 days and the date range for January 1 through July 24. I did this for each year from 2000 through 2024. Yes, the time period is arbitrary and as we all know the start and end dates of any analysis can skew the results. So, with these caveats (and more unmentioned) in mind, here's what I found: Asset correlations for time period 01/01/2024 - 07/24/2024 based on daily returns (Year and Correlation): 2000 0.26; 2001 0.29; 2002 0.31; 2003 0.22; 2004 0.24; 2005 0.25; 2006 0.17; 2007 0.31; 2008 0.18; 2009 0.70; 2010 0.62; 2011 0.81; 2012 0.76; 2013 0.84; 2014 0.73; 2015 0.84; 2016 0.82; 2017 0.72; 2018 0.85; 2019 0.73; 2020 0.93; 2021 0.64; 2022 0.73; 2023 0.73; 2024 0.36 Net-net: through the first 206 days of the year (one additional day for leap years), this is the lowest correlation between Berkshire and the S&P 500 in 15 years. There were high correlations over this time period every year since 2009. So far this year, Berkshire appears to be providing more diversification than it has in a long time...

Interesting piece in the Washington Post today: "Want affordable housing? Take the chassis off manufactured houses." Didn't realize this limitation was in place...wonder what the impact would be for Clayton if this gets changed by Congress... https://wapo.st/3QYdbll

Regardless of size of the positions or whatever profits might be realized, what puzzles (concerns) me is the lack of clarity about the investment philosophy/approach for Todd and Ted. Warren (and Charlie) over the years has talked (and written) many times about his view of stock purchases of companies such as American Express, Coca Cola, or Apple as partial ownership of companies. I realize it's unrealistic that every equity purchase initiated by Warren over the years squarely fell into this category. And not all of them worked out (e.g. airlines -- at least twice). But that's true for some of the wholly owned companies as well. But at least I understood what their "ideal" situation is and can understand and articulate their core philosophy and approach. I cannot do this for Todd and Tedd. For exaample, I've never understood purchases such as SNOW or PAYTM. Both felt so far outside of what Warren & Charlie would do or have explained to us as partial owners in the company with them. I've been wondering about drift for several years now. I am more than a bit wary of the idea of the two of them taking over investment decisions for Warren someday. I was relieved to hear earlier this month of Warren's confidence in Greg's ability to make capital allocation decisions. The way I heard Greg talk about capital allocation sounded just like Warren and Charlie. I left Omaha feeling better about Greg's role in the company.

+1

Article in today's WSJ about the impact of the Key Bridge tragedy on the reinsurance industry: https://www.wsj.com/finance/baltimore-bridge-collapse-could-fuel-reinsurance-pricing-e2db34fc?reflink=desktopwebshare_permalink I hope to hear Mr Buffett's and Mr Jain's views about 1) Berkshire's likely exposure to the tragedy in Baltimore, 2) their thoughts on the likely impact of this incident on the reinsurance industry as a whole, and 3) whether they anticipate any specific challenges/opportunities for Berkshire going forward.

Thanks @nwoodman. This heart warming nugget from the Bishop's blog: "Emilie also said he placed a call from his hospital bed to Warren Buffett, his friend since 1959 and longtime business partner."

My very first "run in" with Berkshire Hathaway was in 1993. I was about to graduate from college. My then girlfriend (now wife) had a family friend, Sam, whose family bought into Berkshire in the early years. Sam's family owned a local bank in a town in Kansas, and he was a cab driver (went to law school, didn't practice law, long story...). We bumped into Sam unexpectedly one day and he was talking about something called "Berkshire Hathway". He was wearing a Berkshire Hathaway hat and talked about going to some meeting. I don't recall if he mentioned Warren Buffett or not. I didn't know what Berkshire Hathaway was and, not wanting to look dumb, I didn't ask any questions. There are many times I mentioned to my wife that I wished asked Sam a simple question ("What is Berkshire Hathaway?") and not worried about looking stupid. Sam was pretty loquacious and I'm sure would have talked with us for over an hour. (Thinking back, this might have been one reason I didn't ask...) I can't remember exactly when we bumped into Sam. A shares in 1993 (no B shares yet) were between about $12K and $17.5K. This was way beyond what I had as a college student (I "owned" debt), and in a pre-Internet age (I didn't have my first email address until Fall 1993) it was not as easy to learn about Berkshire Hathaway let alone Warren Buffett and Charlie Munger. So this is doubtless pure fantasy and wishful thinking on my part that "if only..." It would be another 17 years before I "ran into" Berkshire Hathaway again...by this point those A shares would be worth over $120K. Thankfully there were B shares available by this point in time...

I felt exactly the same about this year's letter. It feels like a return to form. There are a few years' letters (or portions of letters) that I've shared with my kids and others. This one merits sharing in its entirety.

Pilot settlement... https://link.cnbc.com/public/33922084

No trial on Monday... https://www.reuters.com/sustainability/boards-policy-regulation/court-cancels-warren-buffett-jimmy-haslam-trial-over-pilot-2024-01-07/

Article in today's WSJ online about Greg Abel and post-Buffett era: https://www.wsj.com/finance/greg-abel-berkshire-hathaway-executive-6b7d8988?st=yi3lwjna3acnbhb&reflink=desktopwebshare_permalink

Gregg Warren at Morningstar's take on this question (from ~8:35 mark to about 12 min mark): https://www.morningstar.com/markets/charlie-munger-warren-buffett-built-berkshire-hathaway-thrive-after-theyre-gone

https://www.dailyjournal.com/articles/375936-charles-t-munger-1924-2023

https://www.cnbc.com/2023/11/29/charlie-munger-these-basic-career-rules-made-me-successful-in-life-with-warren-buffett-i-had-all-3.html

Well, this countersuit against the Haslams begins to provide some additional color on actions that might otherwise seem out of character for the culture playbook at BRK.