Why did so many smart investors miss making a killing on BRK stock?

[sleepydragon]

11 minutes ago, Gmthebeau said:

not a killing by any measure, but yea its low risk 

 

11 minutes ago, Gmthebeau said:

not a killing by any measure, but yea its low risk 

No point of arguing unless you actually have bought a stock and hold for a decade and it made you richer than you would have if u had bought brk.  Or, simply put, are you about 5x richer from 2013? But Brk shareholders are.

 

[Gmthebeau]

24 minutes ago, sleepydragon said:

 

No point of arguing unless you actually have bought a stock and hold for a decade and it made you richer than you would have if u had bought brk.  Or, simply put, are you about 5x richer from 2013? But Brk shareholders are.

 

 

no point in arguing about something when you just change the discussion.  the comment was a "killing".  i am showing BRK has barely beaten the SPY since 2013, your reference point.  Do you guys even bother to check facts?  fucking clueless.

[villainx]

17 hours ago, dealraker said:

So in my investment club which began in 1954

 

So interesting!  How often do you guys meet nowadays?

 

I toyed with an investment club in college and - youth and lack of mentor/role model/proper research - it ended in a few months.

 

[Eldad]

Original poster thinks FRFHF is going to be BRK like in the future.  
 

To me the insurance float combined with buying stocks and companies is/was a beautiful investing innovation.

 

To me it is CSU that has the most beautiful business model I have seen since BRK. And Mark Leonard doing massive volume reading and research projects all the time reminds me of WB and Charlie. 
 

In my mind there is a chance AI makes software a commodity. In which case everything flips and hard assets or something like a railroad becomes king again. CSU guys scoffed at this idea last year but it lingers in my head. 
 

Anyway that’s all to say I think CSU will be the “why didn’t I buy that?” stock going forward. 
 

 

[gfp]

9 minutes ago, Gmthebeau said:

 

no point in arguing about something when you just change the discussion.  the comment was a "killing".  i am showing BRK has barely beaten the SPY since 2013, your reference point.  Do you guys even bother to check facts?  fucking clueless.

 

Mr. Thebeau only makes killings.  He doesn't get out of bed for 10%.  Get it straight

[Gmthebeau]

2 minutes ago, gfp said:

 

Mr. Thebeau only makes killings.  He doesn't get out of bed for 10%.  Get it straight

when you are wrong on the facts just make up stupid shit.  see how far that gets you in life 

[thepupil]

- it's been a great time to own Berkshire

- it's been an almost  just as great time to own US stocks (and at various points in the last decade, even better than berkshire)

- Berkshire's outperformance has been positive but very small in the post GFC era

- if one has a 5-10+ year time horizon it's hard to lose money owning Berkshire, I think moreso than it is w/ US stocks, but that's subjective. 

- I'd note the "barely OP'd for 20 years" commentary is a bit unfair to Berkshire considering its HUGE outperformance in the years leading up to that time frame, in early 2004, Berkshire had just done 17-19%/yr for decade and 5-8%/yr better than market. 

- below is rolling performance vs S&P, to avoid focusing on any single data point.

 

 

 

 

Edited February 28 by thepupil

[gfp]

5 minutes ago, Gmthebeau said:

when you are wrong on the facts just make up stupid shit.  see how far that gets you in life 

 

Ah yes, I see, the Morningstar chart was not properly accounting for the reinvestment of all dividends (or deducting any tax on those dividends).  Ignoring the tax that would have been owed, the S&P 500 with all dividends reinvested at the time they were paid did 600% over my holding period of Berkshire.  (9/2001 - present).  Berkshire did 777.5% so only 177% better than the index.

 

You'd be surprised how well 10% tax-deferred over a long period of time can do for ya.

[longlake95]

I've owned BRK for just over 2 decades. Yes, it's been a fine performer. Sure, it hasn't shot the lights out - but neither did MSFT from 2000 to 2010. You had to time it just right to benefit from the massive tech run - who knew? Not my game. BRK is like an equity-bond that yields 10%, with very little risk. Additionally, you get an upside kicker, when the market goes to hell in a hand basket, you lose less, and stand to make much more as they deploy capital during the storm(s). I sleep well owning BRK. I don't think every S&P 500 ETF holder can say the same.

 

Certified fan-boy.

Edited February 28 by longlake95

[Hektor]

9 minutes ago, thepupil said:

it's been a great time to own Berkshire

- it's been an almost  just as great time to own US stocks (and at various points in the last decade, even better than berkshire)

- Berkshire's outperformance has been positive but very small in the post GFC era

- if one has a 5-10+ year time horizon it's hard to lose money owning Berkshire, I think moreso than it is w/ US stocks, but that's subjective. 

 

It will be interesting to see what the rolling p/b for brk was during both periods. And how brk would have performed vs spx when acquired at p/b less than 1.2 or 1.3.

[Gmthebeau]

3 minutes ago, gfp said:

 

Ah yes, I see, the Morningstar chart was not properly accounting for the reinvestment of all dividends (or deducting any tax on those dividends).  Ignoring the tax that would have been owed, the S&P 500 with all dividends reinvested at the time they were paid did 600% over my holding period of Berkshire.  (9/2001 - present).  Berkshire did 777.5% so only 177% better than the index.

 

You'd be surprised how well 10% tax-deferred over a long period of time can do for ya.

still wrong.  see post right above from @thepupil for accuracy.  from 2013, your reference period, $10k invested in BRK would be worth $42,780 vs $41,483 in SPY.   Of course QQQ would have massively outperformed both and been worth about $70,652.  All of them could be invested in a tax deferred account with no taxes due.

[gfp]

5 minutes ago, Gmthebeau said:

still wrong.  see post right above from @thepupil for accuracy.  from 2013, your reference period, $10k invested in BRK would be worth $42,780 vs $41,483 in SPY.   Of course QQQ would have massively outperformed both and been worth about $70,652.  All of them could be invested in a tax deferred account with no taxes due.

I think you have me confused with somebody else.  (and, no, I cannot invest anything in a tax deferred account and have never had one)

Edited February 28 by gfp

[Gmthebeau]

4 minutes ago, gfp said:

I think you have me confused with somebody else.  (and, no, I cannot invest anything in a tax deferred account and have never had one)

ok, well good luck with your math skills.  i will be muting you now.

[John Hjorth]

15 minutes ago, gfp said:

I think you have me confused with somebody else.  (and, no, I cannot invest anything in a tax deferred account and have never had one)

 

11 minutes ago, Gmthebeau said:

ok, well good luck with your math skills.  i will be muting you now.

 

I hereby allow my self to express my personal sincere wishes that we from here can get back on track according to the intent and purpose for @Vikings opening and starting of this topic.

[John Hjorth]

18 hours ago, dealraker said:

... I'd say online investors communicate and interact in such a manner that it pretty much mandates an all out effort to outperform the the market constantly.  To me that means when Berkshire, the stock, goes up fast it will be sold by nearly everyone.  ...

 

A comment from a person here on CoBF, Charlie [ @dealraker ], which this topic started by @Viking may have been adressed - in reality - towards directly, with Charlie at likely several occations over the decades experiences Berkshire investors offloading the stock after it may have run up, while personally holding on - now for decades.

 

- - - o 0 o - - -

 

A then just recently : 

 

Seeking Alpha [ February 27^th 2024] : Fish Town Capital : Why I Sold My Entire Berkshire Stake.

 

Striking ... - Huh?!

 

- - - o 0 o - - -

 

At least a bit striking to me. I have no SA subscription, but I have read the article. The contents of the article  makes absolutely no sense to me.

[gfp]

Well I didn't read the article but there are plenty of good reasons to sell Berkshire at a $930 Billion market cap this week.  The best reason is always to put the capital into better investments. 

[Munger_Disciple]

1 hour ago, gfp said:

You'd be surprised how well 10% tax-deferred over a long period of time can do for ya.

 

 

For the benefit of at least one of the newer posters on this board who seems to think he knows everything, I would just say this: @gfp is one of the best posters with deep knowledge of the companies he comments on. I truly respect, enjoy and look forward to reading his posts and I always learn something new from him. There are very few posters on this board board I feel this way & @gfp is one of the best. 

Edited February 28 by Munger_Disciple

[Gmthebeau]

2 minutes ago, Munger_Disciple said:

 

 

For the benefit of at least one of the newer posters on this board who seems to think he knows everything, I would just say this: @gfp is one of the best posters with deep knowledge of the companies he comments on. I truly respect, enjoy and look forward to reading his posts and I always learn something new from him. There are very few posters on this board board I feel this way & @gfp is one of the best. 

lol, he cant do basic math.  you are now muted too.  most of you are clueless.  this much is obvious.

[Munger_Disciple]

Just now, Gmthebeau said:

lol, he cant do basic math.  you are now muted too.  most of you are clueless.  this much is obvious.

 

I consider it an honor to be muted by you. 

[gfp]

5 minutes ago, Gmthebeau said:

lol, he cant do basic math.  you are now muted too.  most of you are clueless.  this much is obvious.

I do think you are conflating a post by someone else that mentioned 2013 with my post which preceded it and covered the period from September 2001 to the present, which is my holding period.

[Jaygo]

I’m guessing Viking was wondering if we are going to become rich off of Fairfax.  Is buying ffh today like buying brk in the 70’s. 
 

I honestly can’t say, if the structure is similar it may work out but I think WB has an edge on capital allocation that is almost unrepeatable for others. I really hope for all of our sakes ffh performs as well, so 20 years from now I could say I was part of that great run. 
 

I don’t feel as comfortable with ffh like I do with brk but that is some very biased thinking with hindsight. 
 

I have purposely put my long term holds into my taxable accounts so I’m less likely to trade and that group now sits with 78 shares of Fairfax. Here’s hoping we all do well. 

[gfp]

Yes, to the original point of the topic - the best way to avoid losing your position in a wonderful long-term compounder is to know the company better than almost anybody.  That is how you gain the confidence that you actually do know the company and its prospects better than Mr. Market.  To stop taking any cues whatsoever from the market price.  That is what allows you to recognize a dip on a short seller's report as an opportunity to add and not the beginnings of doubt creeping in.  It is what allows you to disregard the recent performance of the shares in deciding if it is a good investment today.

 

And if you are not wired naturally for the long hold - a growing deferred tax liability helps.

 

My average cost basis on FFH in CAD is $686 and for FRFHF is $569 - which isn't particularly low - because I never stopped adding shares.  It is a better outcome than if I had just admired my pristine low cost basis and never made the position larger.

Edited February 28 by gfp

[Munger_Disciple]

24 minutes ago, gfp said:

Yes, to the original point of the topic - the best way to avoid losing your position in a wonderful long-term compounder is to know the company better than almost anybody.  That is how you gain the confidence that you actually do know the company and its prospects better than Mr. Market.  To stop taking any cues whatsoever from the market price.  That is what allows you to recognize a dip on a short seller's report as an opportunity to add and not the beginnings of doubt creeping in.  It is what allows you to disregard the recent performance of the shares in deciding if it is a good investment today.

 

And if you are not wired naturally for the long hold - a growing deferred tax liability helps.

 

My average cost basis on FFH in CAD is $686 and for FRFHF is $569 - which isn't particularly low - because I never stopped adding shares.  It is a better outcome than if I had just admired my pristine low cost basis and never made the position larger.

 

Excellent points! I have had pleasant LT experience (22 years+) with Berkshire in my taxable account which I continue to hold. But I expect lower returns going forward from BRK. 

I view FFH as riskier (in almost all respects) than BRK with potentially higher medium term return, so I own less of it compared to BRK primarily in my tax deferred account. I don't think FFH can duplicate the 1980-2000 success of Berkshire going forward even if its management is as good (& it is not). Even BRK couldn't duplicate its past success today if starting out with a much smaller capital base & younger versions Warren, Charlie, Ajit & Greg. There is way too much competition. 

[backtothebeach]

A lot of excellent points above!

 

To the original question, one aspect not mentioned yet, is that buying a large position in Berkshire for the long-term basically meant admitting that you are not that great, and that Warren Buffett has a better shot at compounding your money. Even though it is Warren Buffett ... there is some humility in this.

 

---

Here is a neat tool for comparing Berkshire with SPY (dividend adjusted). You can drag the left edge of the slider that says '200 days' to the left to see any time period: https://stockcharts.com/freecharts/perf.php?SPY,BRK/B.

[gfp]

3 minutes ago, backtothebeach said:

A lot of excellent points above!

 

To the original question, one aspect not mentioned yet, is that buying a large position in Berkshire for the long-term basically meant admitting that you are not that great, and that Warren Buffett has a better shot at compounding your money. Even though it is Warren Buffett ... there is some humility in this.

 

---

Here is a neat tool for comparing Berkshire with SPY (dividend adjusted). You can drag the left edge of the slider that says '200 days' to the left to see any time period: https://stockcharts.com/freecharts/perf.php?SPY,BRK/B.

 

Thanks - that's a great charting tool - bookmarked!