2017 letter

[sleepydragon]

I have read all of Web's past letters for three times. I thought this one is another great one!

 

What in particular did you like?

 

the bet, the part about switching to BRK stocks in 2012

also like the part about not using debt/margin, using BRK stock's 50% falls as examples.

and the part about making less decisions outperforms

[Charlie]

Good letter.

 

P/B is 1,436.

 

I liked this sentence:

"But 2017 was far from standard: A large portion of our gain did not come from anything we accomplished at Berkshire.

The $65 billion gain is nonetheless real – rest assured of that."

 

I also liked the discussion about big "easy" decisions. The 20 punch card model comes to my mind.

If you are making small decisions it´s probably not worth doing. And do the math.

[John Hjorth]

Warren Buffett to retire from Kraft Heinz board.

 

https://www.bloomberg.com/news/articles/2018-02-23/warren-buffett-to-retire-from-kraft-heinz-board-as-his-term-ends

 

I don't want to be a downer but this coupled with Abel and Jain being named vice chairs gives me a bad feeling that the Buffett era may be coming close to an end. We may get some big changes/revelations in the Letter tomorrow.

 

Nothing wrong about that, if its based on BRK corporate govenanence.

 

 

It could be a very good thing.  If WEB's energy level or mental acuity are weakening, then we want him to concentrate what's left on the allocation of BRK's $109+ billion of cash.  That's where he has a comparative advantage over almost everyone else on the planet.

 

Let somebody else sit on the Heinz board of directors to agonize over the best way to produce ketchup and Kraft Dinner.

 

 

SJ

 

I agree with StubbleJumper here. And I apologize for a low quality reply to rb here.

 

To elaborate a bit: Yes, somehow it's a bit sad, actually. But that's life - some day, it comes to an end for all of us - at least so far. [That may perhaps change over time going forward.]

 

Mr. Buffett isen't exactly a spring bunny any longer [despite longinvestor has called him a energizer bunny, that keeps on and on [ : - ) ]]. He has stated several times, that he loves his job. That job must be just daunting, despite he loves it. Berkshire is just so vast now. I suppose he has got a lot of support and help on the running follow-up on things from Mr. Hamburg now during many years.

 

So I see it as an initiative to reduce his actual workload - by delegation of responsibility and tasks - to two persons he trusts. To me, that's good thing, because it will reduce his tear and wear, likely making him last longer. That is what I personally want - to me, Mr. Buffett has deserved this.

 

- - - o 0 o - - -

 

For more than one reason I would like to experience Mr. Buffett to do the mother of all Berkshire acquisitions [ ~ USD 100 B, perhaps?] before he retires. [ : - ) ].

[Ballinvarosig Investors]

Yet another poor letter, filled with horrible contradictions. The only thing that was honest about the letter, was that the negative undertone about the ability of Berkshire to acquire businesses at a reasonable price.

[John Hjorth]

Yet another poor letter, filled with horrible contradictions. ....

 

Please elaborate a bit about your line of thinking here, Ballinvarosig Investors,

 

It would be much appreciated, thanks.

[Ballinvarosig Investors]

Yet another poor letter, filled with horrible contradictions. ....

 

Please elaborate a bit about your line of thinking here, Ballinvarosig Investors,

 

It would be much appreciated, thanks.

Do I really need to go there?

 

There is just so much wrong with what Warren Buffett is saying these days.

 

For a start, he continues to beat the very worn drum that a basket of hedge fund, fund of funds will under perform an pre-specified index of his choosing. What's worse, is that he conflates that statement with the notion that all types of active management is bad. Not only that, but he states that in all his career (60 years plus of being in the market), that a maximum of ten people he has ever met can hope to achieve the goal of out-performing the index. It seems to me that he is in complete opposition with his previous teachings, namely that an investor with a small amount of capital has a very realistic chance of out-performing the market.

 

John Hjorth - I take it that you are an adherent of the cult of Buffett? If you are a devotee, then may I ask, have you adopted the advice of your protegé (excuse the pun) and adopted the index strategy? From the recent statements of Buffett, I think it's fairly clear that the circle of ten people that he identified as having the ability to out-perform the market are extremely unlikely to be inhabiting this particular discussion forum.

 

It seems to me that yourself and other adherents of Warren Buffett would do much better in your present investment strategies than to sell all your holdings and adopt index weighted holdings in the likes of Tesla and Snapchat, companies that truly represent the dynamism of American business (clearly, anything that is not American is abysmal by the standards of Buffet).

[Rod]

Yet another poor letter, filled with horrible contradictions. ....

 

Please elaborate a bit about your line of thinking here, Ballinvarosig Investors,

 

It would be much appreciated, thanks.

Do I really need to go there?

 

There is just so much wrong with what Warren Buffett is saying these days.

 

For a start, he continues to beat the very worn drum that a basket of hedge fund, fund of funds will under perform an pre-specified index of his choosing. What's worse, is that he conflates that statement with the notion that all types of active management is bad. Not only that, but he states that in all his career (60 years plus of being in the market), that a maximum of ten people he has ever met can hope to achieve the goal of out-performing the index. It seems to me that he is in complete opposition with his previous teachings, namely that an investor with a small amount of capital has a very realistic chance of out-performing the market.

 

John Hjorth - I take it that you are an adherent of the cult of Buffett? If you are a devotee, then may I ask, have you adopted the advice of your protegé (excuse the pun) and adopted the index strategy? From the recent statements of Buffett, I think it's fairly clear that the circle of ten people that he identified as having the ability to out-perform the market are extremely unlikely to be inhabiting this particular discussion forum.

 

It seems to me that yourself and other adherents of Warren Buffett would do much better in your present investment strategies than to sell all your holdings and adopt index weighted holdings in the likes of Tesla and Snapchat, companies that truly represent the dynamism of American business (clearly, anything that is not American is abysmal by the standards of Buffet).

 

Maybe I'm wrong but in referring to the 10 investors, didn't Buffett say that he only has met 10 than he could predict in ADVANCE would beat the market? That is a very different statement from saying there are only 10 people that can beat the market.

[Spekulatius]

i think you missed the main point in BRK shareholder letter regarding investing - WEb does not condem actual be investment per say, he condemns the high fees that come along with it and are apparently not matched with performance. Index funds win, because they are cheap, not because thrust are clever investments.

[mcliu]

Maybe I've misunderstood, but I thought Buffett's position was not "everyone should index" but that fund managers (on average) are charging way too much for their mediocre performance?

Isn't it also true that for one manager to outperform, you need another manager to under-perform by the same amount? But if both managers take fees,  the aggregate net worth of the investor is less.. So what's wrong with his stance here..?

[nickenumbers]

 

I don't remember where I saw the formula but something about a maximum stock p/e in relation to long bond. If the long bond is 3%, that's a P/e of 33...so is it better to buy a stock at 1/2 that (16.5x p/e max?) to be conservative +/-?

 

That is a really cool rule of thumb.  I have not heard that before.  It is a good quick short hand.  Thanks for sharing it, mcliu.

[StubbleJumper]

Yet another poor letter, filled with horrible contradictions. ....

 

Please elaborate a bit about your line of thinking here, Ballinvarosig Investors,

 

It would be much appreciated, thanks.

Do I really need to go there?

 

There is just so much wrong with what Warren Buffett is saying these days.

 

For a start, he continues to beat the very worn drum that a basket of hedge fund, fund of funds will under perform an pre-specified index of his choosing. What's worse, is that he conflates that statement with the notion that all types of active management is bad. Not only that, but he states that in all his career (60 years plus of being in the market), that a maximum of ten people he has ever met can hope to achieve the goal of out-performing the index. It seems to me that he is in complete opposition with his previous teachings, namely that an investor with a small amount of capital has a very realistic chance of out-performing the market.

 

John Hjorth - I take it that you are an adherent of the cult of Buffett? If you are a devotee, then may I ask, have you adopted the advice of your protegé (excuse the pun) and adopted the index strategy? From the recent statements of Buffett, I think it's fairly clear that the circle of ten people that he identified as having the ability to out-perform the market are extremely unlikely to be inhabiting this particular discussion forum.

 

It seems to me that yourself and other adherents of Warren Buffett would do much better in your present investment strategies than to sell all your holdings and adopt index weighted holdings in the likes of Tesla and Snapchat, companies that truly represent the dynamism of American business (clearly, anything that is not American is abysmal by the standards of Buffet).

 

Maybe I'm wrong but in referring to the 10 investors, didn't Buffett say that he only has met 10 than he could predict in ADVANCE would beat the market? That is a very different statement from saying there are only 10 people that can beat the market.

 

 

I think, to add precision, it's more like:  Maybe I'm wrong but in referring to the 10 investors, didn't Buffett say that he only has met 10 than he could predict in ADVANCE would beat the market, after taking into account costs? That is a very different statement from saying there are only 10 people that can beat the market.

 

 

A great many individual investors can beat the market if they keep their costs low enough, which is easy to do.  In fact, if I picked any random stock on the NYSE and threw all of my money into it, there's a good probability that I would beat the market (not sure if it's one-third of stocks or one-half of stocks that do better than the index because the distribution is asymmetric).

 

I'd say that Buffett is correct.  I'm not sure that I can name all ten of the guys that he had in mind.  Walter Schloss has left us....I guess there's Seth Klarman.  Buffett himself.  And I don't know of many more that regularly and predictably thrash the index after costs.

 

 

SJ

[Viking]

"Our aversion to leverage has dampened our returns over the years. But Charlie and I sleep well. Both of us

believe it is insane to risk what you have and need in order to obtain what you don’t need."

 

Add to leverage, aversion to high concentration, and this is a lesson from 2013-2014 that I am not about to forget.

 

When things go your way for years (almost 2 decades), delivering 10-20%+ above index returns (pre-leverage) and appear easy, you are highly subject to make over-confidence mistakes and to ignore some risks.

 

I also wish I had never heard of Buffett's bet that he could make 50% returns with a small sum. Setting high goals is essential in my opinion to achieve something great however, when ambition becomes too large it too makes you ignore some risks.

 

Cardboard

 

Cardboard, solid advice I need to pay more attention to...

[John Hjorth]

"Our aversion to leverage has dampened our returns over the years. But Charlie and I sleep well. Both of us

believe it is insane to risk what you have and need in order to obtain what you don’t need."

 

Add to leverage, aversion to high concentration, and this is a lesson from 2013-2014 that I am not about to forget.

 

When things go your way for years (almost 2 decades), delivering 10-20%+ above index returns (pre-leverage) and appear easy, you are highly subject to make over-confidence mistakes and to ignore some risks.

 

I also wish I had never heard of Buffett's bet that he could make 50% returns with a small sum. Setting high goals is essential in my opinion to achieve something great however, when ambition becomes too large it too makes you ignore some risks.

 

Cardboard

 

Cardboard, solid advice I need to pay more attention to...

 

Viking, are you in the business - at all - of using leverage?

[John Hjorth]

Yet another poor letter, filled with horrible contradictions. ....

 

Please elaborate a bit about your line of thinking here, Ballinvarosig Investors,

 

It would be much appreciated, thanks.

Do I really need to go there?

 

There is just so much wrong with what Warren Buffett is saying these days.

 

For a start, he continues to beat the very worn drum that a basket of hedge fund, fund of funds will under perform an pre-specified index of his choosing. What's worse, is that he conflates that statement with the notion that all types of active management is bad. Not only that, but he states that in all his career (60 years plus of being in the market), that a maximum of ten people he has ever met can hope to achieve the goal of out-performing the index. It seems to me that he is in complete opposition with his previous teachings, namely that an investor with a small amount of capital has a very realistic chance of out-performing the market.

 

John Hjorth - I take it that you are an adherent of the cult of Buffett? If you are a devotee, then may I ask, have you adopted the advice of your protegé (excuse the pun) and adopted the index strategy? From the recent statements of Buffett, I think it's fairly clear that the circle of ten people that he identified as having the ability to out-perform the market are extremely unlikely to be inhabiting this particular discussion forum.

 

It seems to me that yourself and other adherents of Warren Buffett would do much better in your present investment strategies than to sell all your holdings and adopt index weighted holdings in the likes of Tesla and Snapchat, companies that truly represent the dynamism of American business (clearly, anything that is not American is abysmal by the standards of Buffet).

 

Maybe I'm wrong but in referring to the 10 investors, didn't Buffett say that he only has met 10 than he could predict in ADVANCE would beat the market? That is a very different statement from saying there are only 10 people that can beat the market.

 

Please do not put me in any camp.

[Cevian]

Buffett has had a major influence on my thinking in business, investing and private life over the past 30 years. I only learned he was human after having read "Snowball" when it was just released. He will always remain a hero and someone I try to emulate in many ways.

 

Having said all that, the one thing that surprises me is that, with all the influence and respect he has across the world, he doesn't use this platform to comment on several items which seem obviously concerning including the perpetual, and seemingly unending, annual deficits and borrowing by the US. One word from Buffett on this topic and the attention of the media and politicians would focus. I can just see the headline "Buffett worries about US debt level!". He used to be more vocal about such things in the past (remember WMD?). Lately it seems to be more about preserving a "good guy" legacy.

 

We need people of influence and wealth, particularly those who have benefited from the system, to step up and be more vocal about such issues including the unsustainable level of borrowing. This is not a political point but one of fiscal discipline. Otherwise, all these big businesses just got a tax break but the government debt increased as a result.

 

There is no ownership of this problem because the government isn't run like a business and no one has any skin in the game. Politicians don't care. Voters don't mind so long as they are getting a benefit. It seems business don't mind either so long as they are paying less taxes. The government is being milked for all its worth and all that will be left is a debt-ridden carcass eventually. Berkshire would never be run that way because Buffett has a legacy (and shareholders) to protect. When it comes to government, it appears to be no ones legacy since no one person can be identified as having cause the problem.

 

Sorry, the rant isn't about Buffett per se but about important issues that need people of influence to speak out about. The one dimensionality of it all gets to me.

[Txvestor]

Buffett has had a major influence on my thinking in business, investing and private life over the past 30 years. I only learned he was human after having read "Snowball" when it was just released. He will always remain a hero and someone I try to emulate in many ways.

 

Having said all that, the one thing that surprises me is that, with all the influence and respect he has across the world, he doesn't use this platform to comment on several items which seem obviously concerning including the perpetual, and seemingly unending, annual deficits and borrowing by the US. One word from Buffett on this topic and the attention of the media and politicians would focus. I can just see the headline "Buffett worries about US debt level!". He used to be more vocal about such things in the past (remember WMD?). Lately it seems to be more about preserving a "good guy" legacy.

 

We need people of influence and wealth, particularly those who have benefited from the system, to step up and be more vocal about such issues including the unsustainable level of borrowing. This is not a political point but one of fiscal discipline. Otherwise, all these big businesses just got a tax break but the government debt increased as a result.

 

There is no ownership of this problem because the government isn't run like a business and no one has any skin in the game. Politicians don't care. Voters don't mind so long as they are getting a benefit. It seems business don't mind either so long as they are paying less taxes. The government is being milked for all its worth and all that will be left is a debt-ridden carcass eventually. Berkshire would never be run that way because Buffett has a legacy (and shareholders) to protect. When it comes to government, it appears to be no ones legacy since no one person can be identified as having cause the problem.

 

Sorry, the rant isn't about Buffett per se but about important issues that need people of influence to speak out about. The one dimensionality of it all gets to me.

 

Agree Cevian. Its crazy that this far into an economic expansion cycle, we have not come close to seeing a balanced budget, and the debt to GDP ratio is rising. We are yet to have most of the baby boomers hit retirement and draw medicare and SS, and we are not even close to discussing entitlement reforms in a serious way.

Mr Buffett has made this choice consciously, but one wonders if it is really the right thing. I wonder if his social liberalism is what is preventing him raising his voice.

In the past he proposed some ideas to curb the trade deficits etc. but has gone stone cold quiet about these topics since the GFC. Ironic since like you said, he has both brainpower, the perch as well as the respect of wide swaths of society in addition to a disarming communication style.

I fear just like the blame everyone scenario with mass stupidity identified as the cause of the GFC, ie Lax lending, stupid borrowing, poor politicking, turn the other way regulating, and self serving corporations was the cause. Ie Multi factorial. Sound familiar?

We will ironically come to the same situation on a much grander acale eventually as numbers are very concrete and the clock is ticking. Its really an unfortunate scenario for someone who manages their affairs prudently, just as it was in 2008/9 for the do it right homeowner, but everyone flushed "moral hazzard" down the toilet like it didn't matter. I guess immoral isn't so when done on a grand scale. 

[sleepydragon]

Have you been able to beat the index over the last 10,15,20 years?

Buffett’s argument that hedge funds in aggregate can’t beat index makes perfect sense to me. They may make money from each other, or retail investors who trade frequently, but can’t beat  index investors who barely trade.

On the other hand, I work in finance, so I sort of wished Buffett not saying these things for my own sake :)

 

Yet another poor letter, filled with horrible contradictions. ....

 

Please elaborate a bit about your line of thinking here, Ballinvarosig Investors,

 

It would be much appreciated, thanks.

Do I really need to go there?

 

There is just so much wrong with what Warren Buffett is saying these days.

 

For a start, he continues to beat the very worn drum that a basket of hedge fund, fund of funds will under perform an pre-specified index of his choosing. What's worse, is that he conflates that statement with the notion that all types of active management is bad. Not only that, but he states that in all his career (60 years plus of being in the market), that a maximum of ten people he has ever met can hope to achieve the goal of out-performing the index. It seems to me that he is in complete opposition with his previous teachings, namely that an investor with a small amount of capital has a very realistic chance of out-performing the market.

 

John Hjorth - I take it that you are an adherent of the cult of Buffett? If you are a devotee, then may I ask, have you adopted the advice of your protegé (excuse the pun) and adopted the index strategy? From the recent statements of Buffett, I think it's fairly clear that the circle of ten people that he identified as having the ability to out-perform the market are extremely unlikely to be inhabiting this particular discussion forum.

 

It seems to me that yourself and other adherents of Warren Buffett would do much better in your present investment strategies than to sell all your holdings and adopt index weighted holdings in the likes of Tesla and Snapchat, companies that truly represent the dynamism of American business (clearly, anything that is not American is abysmal by the standards of Buffet).

[Viking]

"Our aversion to leverage has dampened our returns over the years. But Charlie and I sleep well. Both of us

believe it is insane to risk what you have and need in order to obtain what you don’t need."

 

Add to leverage, aversion to high concentration, and this is a lesson from 2013-2014 that I am not about to forget.

 

When things go your way for years (almost 2 decades), delivering 10-20%+ above index returns (pre-leverage) and appear easy, you are highly subject to make over-confidence mistakes and to ignore some risks.

 

I also wish I had never heard of Buffett's bet that he could make 50% returns with a small sum. Setting high goals is essential in my opinion to achieve something great however, when ambition becomes too large it too makes you ignore some risks.

 

Cardboard

 

Cardboard, solid advice I need to pay more attention to...

 

Viking, are you in the business - at all - of using leverage?

 

John, I have a small mortgage on my house, currently at a rate of 2.7%. I could be mortgage free but I have been able to generate an average annual return of about 15% over the past 20 years. Other than this example I have never used leverage.

 

The strategy I have used with great success over the years is concentration. And I have even been 100% invested in one company a few times in the past 20 years and every time it has worked out very well. My portfolio is now getting to a size that capital preservation is becoming a higher priority than return. Extreme concentration does not fit with capital preservation and so I need to retrain my brain. I especially liked Cardboard’s comment “When things go your way for years (almost 2 decades), delivering 10-20%+ above index returns (pre-leverage) and appear easy, you are highly subject to make over-confidence mistakes and to ignore some risks.“

[Guest longinvestor]

"Our aversion to leverage has dampened our returns over the years. But Charlie and I sleep well. Both of us

believe it is insane to risk what you have and need in order to obtain what you don’t need."

 

Add to leverage, aversion to high concentration, and this is a lesson from 2013-2014 that I am not about to forget.

 

When things go your way for years (almost 2 decades), delivering 10-20%+ above index returns (pre-leverage) and appear easy, you are highly subject to make over-confidence mistakes and to ignore some risks.

 

I also wish I had never heard of Buffett's bet that he could make 50% returns with a small sum. Setting high goals is essential in my opinion to achieve something great however, when ambition becomes too large it too makes you ignore some risks.

 

Cardboard

 

Cardboard, solid advice I need to pay more attention to...

 

Viking, are you in the business - at all - of using leverage?

 

John, I have a small mortgage on my house, currently at a rate of 2.7%. I could be mortgage free but I have been able to generate an average annual return of about 15% over the past 20 years. Other than this example I have never used leverage.

 

The strategy I have used with great success over the years is concentration. And I have even been 100% invested in one company a few times in the past 20 years and every time it has worked out very well. My portfolio is now getting to a size that capital preservation is becoming a higher priority than return. Extreme concentration does not fit with capital preservation and so I need to retrain my brain. I especially liked Cardboard’s comment “When things go your way for years (almost 2 decades), delivering 10-20%+ above index returns (pre-leverage) and appear easy, you are highly subject to make over-confidence mistakes and to ignore some risks.“

Nice story. Need stories like yours being a concentrator myself. Would you please elaborate on why extreme concentration does not fit with capital preservation. Is it worry of permanent loss or underperformance with larger sums or something else? Just trying to understand.

[rb]

Nice story. Need stories like yours being a concentrator myself. Would you please elaborate on why extreme concentration does not fit with capital preservation. Is it worry of permanent loss or underperformance with larger sums or something else? Just trying to understand.

I'm not going to speak for Viking. But the story you're looking for is that one that you only need to get rich once.

 

Concentration works to create wealth. All rich people are either concentrated or made their money through concentration. Most often it's not marketable securities. It's a private business. But those are securities nonetheless. Market listings don't matter that much. Also if you want to expand the field of vision almost everyone on the planet is concentrated. People are overly concentrated and exposed to their careers. Furthermore people are overly concentrated in their jobs. That's why most really don't want to loose them. So concentration is mostly everywhere and a fact in everyday life.

 

So concentrating is great at building wealth. But it also carries risk - don't drop that basket of eggs! It's stressful - keep watching that basket of eggs! Why should you have to deal with that crap if you're rich? A lot of people here are very focused on performance vs some index. But that's not so relevant if you're wealthy. Does your jet (or insert you own reference) run different if you made 8% or 10% last year? Also the wealthier you are the greater the incentive not to loose it. Because the wealthier you are the harder it will be to rebuild that wealth. So you're inclined to pay a premium to maintain that wealth... kinda like a wealth insurance policy.

[Hielko]

I would see it from a different perspective. If you are really rich you can take way more risk and afford losing money. What can’t you do with 100 million dollar that you can with one billion? On the other hand, going from 1 million to 100K would be a big blow for almost anyone.

[scorpioncapital]

Concentration is very risky in the case where you do not control the management and the management has a defect and cannot be displaced. This is the one case I can think of where it is deadly to concentrate. If the management is solid, intelligent, not committed down one wrong road, then giving up control is ok too. Or control the entity yourself - but then you have to watch that you yourself don't turn out to have all the weaknesses of a bad manager.

[Cigarbutt]

I would respectfully add that concentration in Berkshire does not meet the strict definition of concentration.

 

-The focus has always included a large consideration for downside protection, whatever scenario, macro or otherwise.

-The downside protection is "naturally" counter-cyclical as it is firmly anchored on true value.

-The insurance/reinsurance side is the most "risky" but Mr Buffett, again this year in his short letter, describes how the non-insurance little correlated businesses act as a buffer against large insurable events. Even a massive event would be, after a relatively painful period, a major plus in the forward-looking insurance competitive landscape.

-The non-insurance businesses are many, varied, do not overly rely on leverage and many in the group, including in the big 5, could be considered, in isolation, as a diversified entity (ie the Marmon Group).

 

I would even say that holding BRK now is an excellent way to mitigate concentration risk because of Mr. Buffett's unique ability to maintain independent thinking in this homogenized market.

 

Thinking about what Viking has described, I would say that, when capital preservation becomes a larger issue, there is the potential "risk" that the risk (and reward?) appetite goes down.

To reconcile, Mr. Buffett mentions that you have to sleep well and only need to get a few things right.

Sounds good. :)

 

 

[Spekulatius]

The biggest risk with BRK is WEB age. I think once WEb passes on the baton, BRK will fundamentally change. Nobody can fill WEB shoes and do the Job the same way he does, or they will do it badly. do BRK will have to change, my guess ist hat headquarter staff will significantly expand. I also think that BRK will have to to beef up their financial controls, the system in placebos probanly ver weak and build on a web of personal relationships and trust that won’t work past WEB departure.

[Viking]

“Nice story. Need stories like yours being a concentrator myself. Would you please elaborate on why extreme concentration does not fit with capital preservation. Is it worry of permanent loss or underperformance with larger sums or something else? Just trying to understand.”

 

longinvestor, when I read Buffett’s quote in Cardboard’s post I added the words extreme concentration because it fits for me :-)  “Our aversion to leverage and extreme concentration has dampened our returns over the years. But Charlie and I sleep well. Both of us believe it is insane to risk what you have and need in order to obtain what you don’t need."