Why did lots of investors not invest in Berkshire Hathaway in 1980's and 1990's?

[Viking]

We are going to channel Charlie Munger and ask a question today. We are going to invert. 

 

Berkshire Hathaway has delivered an unbelievably high return for its shareholders over the past 59 years. However, two 10-year periods were MUCH better for investors than others:

• 1974 to 1984 = 41.4%
• 1984 to 1994 = 32%

Starting point matters. Stocks were very cheap in 1974. And Berkshire Hathaway was a very small company. 

 

My question is what stopped an investor from buying Berkshire Hathaway in the 1980's or even the early 1990's? And then pulling a Rip Van Winkle?

 

I have my own thoughts. But, before I share those, I would love to hear from other board members. Perhaps you care to share your own story. Or you have thoughts about Mr. Market (what other were thinking at the time). 

 

Or perhaps you were one of the few who bought Berkshire Hathaway decades ago, got your position size right, and pulled a Rip Van Winkle. What was your thinking that allowed you to do this? My guess is many more older board members got their investment in Berkshire Hathaway wrong than right - but I am happy to be corrected.  

 

This is a very relevant question/topic today because of Fairfax. Personally, I don't want to make the same mistake with Fairfax that I made with Berkshire Hathaway (grossly misjudging the opportunity). Of course, to do this I need to correctly diagnose the problem first: What was the mistake that I made with Berkshire Hathaway many years ago? (Or mistakes in my case.)

 

But 'grossly misjudging the opportunity' is a cop out. It doesn't really say anything helpful. I am hoping to get into the juicy stuff with this thread (specifics).  I look forward to discussing this important topic with other board members. 

 

Edited October 12, 2025 by Viking

[CassiusKing1]

My initial thought would be awareness.  Prior to the internet, only way to have heard or known about BRK would have been through the WSJ or some other publication or word of mouth.

Not to mention there was the 87 crash and the 90 recession during that period, most folks may have been turned off.

Personally I hadn't heard too much of Buffett until the early 90's.  Courtesy of the Forbes annual 400 list, early internet days and reading about the cap cities deal, etc.

[charlieruane]

Yeah, I think (lack of) awareness is a big part of it. John Train didn't profile Buffett until 1979, and his book-length works on Buffett came out much later (1987 and 1994 were the big ones, I think). Lowenstein's big bio was 1995. Also, the Solomon crisis raised Buffett's profile quite a bit, and that was in 1991. 

 

 

[dealraker]

Buffett was VERY well known by Wall Street much earlier than you may realize.  I would add to this stating that people and the financial news were strongly interested in what Buffett - actually Berkshire - bought in the markets but much less interested in buying Berkshire stock.

Edited October 13, 2025 by dealraker

[Williams406]

I was in an office book club that read Intelligent Investor circa 1998. I had heard of Buffett and Berkshire and that book prompted me to take my first position in BRK--hard to believe it has been nearly 30 years for me. Added on significantly toward the end of 1999 with massive adds in Spring of 2009. The narrative in the late 90's was that Buffett was stodgy, old-fashioned, and out of date. He had no strategy to capitalize on the internet for Pete's sake so Berkshire was viewed as the equivalent of a buggy-whip manufacturer. During that era, I think that narrative served as a major reason for people avoiding Berkshire investment. During the GFC, I think many market participants were selling anything not nailed down. More generally, BRK's diverse ops and holdings don't lend themselves to any kind of story or hook. Berkshire isn't really a "play" on anything other than investing competence over decades.

[73 Reds]

21 minutes ago, Williams406 said:

I was in an office book club that read Intelligent Investor circa 1998. I had heard of Buffett and Berkshire and that book prompted me to take my first position in BRK--hard to believe it has been nearly 30 years for me. Added on significantly toward the end of 1999 with massive adds in Spring of 2009. The narrative in the late 90's was that Buffett was stodgy, old-fashioned, and out of date. He had no strategy to capitalize on the internet for Pete's sake so Berkshire was viewed as the equivalent of a buggy-whip manufacturer. During that era, I think that narrative served as a major reason for people avoiding Berkshire investment. During the GFC, I think many market participants were selling anything not nailed down. More generally, BRK's diverse ops and holdings don't lend themselves to any kind of story or hook. Berkshire isn't really a "play" on anything other than investing competence over decades.

Buffett never cared about promoting the stock price.  In fact he never cared at all about the current stock price.  Most people then and now can't reconcile that with investment success.    

[thowed]

Not much to add to the above - I don't think anybody I know/knew with money back then managed their own funds - all outsourced to 'experts' who would charge a lot to benchmark hug, because lack of information made it easy to get away with.

 

Suspect BRK wasn't esp. popular with fund managers as there were no brokers getting paid or lunched by BRK people to help promote it.

 

I always like being reminded how lucky I am to have resources like this site, Substack etc. as otherwise would be reliant on ropey fund managers & I might not even know about Vanguard.

[Pellom]

Not so much the 90's, but I would guess there might have even been a negative perception of Buffett in the early 80's, even if the results were great. He was much more of an "activist" investor in the 70's, and much of that work was making unpopular decisions. 

[schin]

Wasn't Peter Lynch and Michael Price more recognizable names to "Main Street" than Warren and Charlie?  You might buy a pool of great managers... and Warren would win from survivorship biases.... Michael Steinhardt might have been the sexier pick for hedge funds/in the know then.

[dealraker]

6 hours ago, dealraker said:

Buffett was VERY well known by Wall Street much earlier than you may realize.  I would add to this stating that people and the financial news were strongly interested in what Buffett - actually Berkshire - bought in the markets but much less interested in buying Berkshire stock.

I'm talking about the 1970's when I say well known.

[Hamburg Investor]

21 hours ago, Viking said:

We are going to channel Charlie Munger and ask a question today. We are going to invert. 

 

Berkshire Hathaway has delivered an unbelievably high return for its shareholders over the past 59 years. However, two 10-year periods were MUCH better for investors than others:

• 1974 to 1984 = 41.4%
• 1984 to 1994 = 32%

Starting point matters. Stocks were very cheap in 1974. And Berkshire Hathaway was a very small company. 

 

My question is what stopped an investor from buying Berkshire Hathaway in the 1980's or even the early 1990's? And then pulling a Rip Van Winkle?

 

I have my own thoughts. But, before I share those, I would love to hear from other board members. Perhaps you care to share your own story. Or you have thoughts about Mr. Market (what other were thinking at the time). 

 

Or perhaps you were one of the few who bought Berkshire Hathaway decades ago, got your position size right, and pulled a Rip Van Winkle. What was your thinking that allowed you to do this? My guess is many more older board members got their investment in Berkshire Hathaway wrong than right - but I am happy to be corrected.  

 

This is a very relevant question/topic today because of Fairfax. Personally, I don't want to make the same mistake with Fairfax that I made with Berkshire Hathaway (grossly misjudging the opportunity). Of course, to do this I need to correctly diagnose the problem first: What was the mistake that I made with Berkshire Hathaway many years ago? (Or mistakes in my case.)

 

But 'grossly misjudging the opportunity' is a cop out. It doesn't really say anything helpful. I am hoping to get into the juicy stuff with this thread (specifics).  I look forward to discussing this important topic with other board members. 

 

My thoughts:
1. High price of one share. One share cost over 1.000 dollar most of the time (not in 1980 and 1981 or so). People don't like to buy shares that are so high. It's a bias. But people don't like buying penny stocks and they either don't like buying a stock for 1.000 dollar (how much is that 1.000 dollar from around 1982 inflation adjusted to today?) At least that was the reason, why Gayner hadn't bought it beginning of 1980ies.
2. Buffett wasn't talking other people into BRK. No Marketing.
3. Insurance is boring. Nifty Fifty were the cool stuff. Japan. Tiger states. New Market. "It's not fancy talking about an insurance stock on a cocktail party". 
4. Relatively high price of BRK in terms of e. g. PB Ratio. If you don't understand the business, you might think there's reversion to the mean. Although pb ratio was below 2.0 pb ratio for most of the time, the average insurance stock was valued way cheaper on average. I know a bit about insurance because of Warren and his idea of float and its value. I think before Buffett, this was hardly discussed. There was just no Berkshire before Berkshire (btw: Was Davis well known in the 80ies and 90ies?!).
5. As far as I know the "Buffett hype" began more like end of 80ies. Until than there were only little news articles about or from Buffett. I know: There are some famous articles, that are often cited. But there aren't that many in the beginning of the 20 years timeframe we look at here, and they were lost in the noise of the stock market articles. Growth of BRK was very high in the 70ies; but it was a small business. So it needed some time to get big. People don't write and read a lot about mid caps.
6. Looking back, it's incomprehensible, that BRK wasn't more expensive. But there was a premium for Berkshire compared to other insurers; it just wasn't high enough from today's perspective.
7. Today the "Buffett System" is known and discussed in depth and very broadly. That wasn't the case beginning of the 80ies.
8. I think Quality investing was rather unknown and not as widespread as it is today. People were reluctant to pay a premium on the price, even if the company was good. Look at Berkshire itself: Munger had to talk Buffett into quality. This more a "grey" argument, but I think today there's more quality investment investors (especially after the financial crisis).
9. The investments Berkshire did in the early years weren't quality. If you're a quality investor, you might have had a look to BRK, but if the investments within BRK weren't felt "quality" (but the opposite), and you had to pay a premium, that doesn't go together very well.
10. 1980 BRK under Buffett had a track record of 13 years, 1990 23 years and 2000 33 years. Looking at myself I want to see a longtime track record. 23 years seems to be a minimum. There are a lot of people not buying Fairfax and Markel as those are not "old businesses" having a track record of only 38 years. Those 38 year old businesses are called "Baby Berkshires". I guess, a 13, 23 (and even 33 years) track record isn't long enough for a lot of people. 
11. BRKs stock price sometimes went down over 50% (was it three times from 1970 to 1990? Unsure, but sometimes that happened). So BRK wasn't like a steady winner in each and every year (there weren't a lot of steady winners in those years I guess). People don't like volatility. And they don't like to pay a premium, if e. g. 5 years before, the stock was valued at a similar premium and lost 50 percent.
12. The Buffett system is known and understood very well - today. Float plus Value investing plus a small team plus investing a bigger part into equity (and into wholly owned businesses). Buying back stock. Owning (and buying) assets and stocks with hidden value (like Blue stamps). If you don't understand the power of float etc. you just don't buy it.
13. In the 1970s, there was still the textile business, and this industry was (certainly visible to many investors) in serious crisis. The restructuring took some time. It's perhaps like Fairfax and Blackberry: what didn't go so well lingers in the memory for a long time.
14. At the end of the 1970s, Berkshire also had problems with its insurance business and suffered major underwriting losses.
15. From 1973 to 1975, the share price halved (see also above).
16. Many investors love simple business stories. A bank, a car manufacturer, an energy company. Berkshire had a newspaper, an insurance business, textile companies, Blue Chip Stamps and sweets, etc. Many investors will have been put off by this smorgasbord.
17. Again the track record beginning of 80ies and 90ies: Berkshire wasn't easy to understand, as ist changed all the time. From Textile to insurance and other ingredients. And then from value investments to quality ones. So when only looking in the rearview mirror in the 80ies and early 90ies, those returns always came from another episode, that just lied behind and weren't giving any information about the future. So you had to bet on the jockey and his ability, rather than on an intact investment story over X decades.
18. Maybe float of BRK stock wasn't big enough for big investors to buy in?

19. Institutional imperative: It's hard to buy something so special. If you're wrong, investors will ask you, why you bought such a (dubious) thing at a premium, that's not part of a big index.

My best guess is, that it's a combination of all those and a lot of (!) other factors.

My overall thinking is a bit like this:

Any company with an ROE of, say, 18% (this is just a random example) that can reinvest at the same rate will double its book value and more or less its share price every four years. That's a 128-bagger after 28 years (since 1997 until today), a 256-bagger after 32 years (since 1993), a 512-bagger after 36 years (since 1989) and a 1,024-bagger after 40 years (since 1985). It is evident that the further back you go with such extreme ROEs, the clearer it becomes that even unimaginable purchase prices would still yield very good returns. The initial price in any share with such returns appears absurdly low after 2 decades and more. So when your question is asked after X decades, we think: "It must have been so obvious. One could have paid multiple times the price and it would have been a great investments still. Why hasn't anyone seen it?"

You could probably have paid ten times the price for Fairfax Financial in 1986, and it would still be among the top 1% or 5% of the best share investments.

I just want to point out, that such extraordinary returns make the question of yours more fascinating, while at the same time, we as investors often just don't understand the power of compounding in every moment (think: "Today"). Every investment with 15+% returns will give us back so much over time, that 20, 30 years from know, it seems like a no-brainer to buy this stock, if we look back.

But in any moment there's so much noise. People talk about Bitcoin, Military stocks, AI etc. But there will come peace and after AI there will be Quantencomputer; and maybe that will turn around tech totally or it might be the end of Bitcoin too etc.

Still people think they know, how live will end up in 20 years. And they think, if there appears a fancy new technology, a new topic, that investing into any of those new tech stocks will bring extraordinary returns. But that's wrong most of the time. Who invested into internet stocks in the dot com bubble was right, that the internet would change our live totally. But 99 of 100 of those business models weren't good. It was the same with railway. That were very bad investments, while people were right, that its transport capibillty and the speed would change the world dramatically. But people always think they can pick the winners within those fancy sectors. It's a bias.

So those interested in stock market more often than not are "gamblers". They like the adrenaline. That's why they head to the stock market. And I think Berkshire wasn't fancy. Insurance. Hard to understand. Boring. Textile business. Oh my god! Really? Blue Chip stamps. Boring. Candy. I like it, but that's something for my kids. I could invest into Japan, there's so much going on in Tokyo these days. Newspaper? That's 100 years old. What's the story? That's boring. Japan sounds fancy. They don't even pay a dividend? And where's the stock price? What? 4.000 dollar??? 20.000 dollar??? For candy, Blue chip Stamps, Insurance and Textile businesses? Sorry I am out. That can't go up any more.

18% per year over 30 isn't fancy. A 100% return per year over 2 years and a cool AI story is. 

Edited October 13, 2025 by Hamburg Investor

[Hektor]

Conglomerates had a bad reputation back then, and it look a (long) time for the investors to understand Berkshire is different, I guess.

[73 Reds]

1 hour ago, Hamburg Investor said:

My thoughts:
1. High price of one share. One share cost over 1.000 dollar most of the time (not in 1980 and 1981 or so). People don't like to buy shares that are so high. It's a bias. But people don't like buying penny stocks and they either don't like buying a stock for 1.000 dollar (how much is that 1.000 dollar from around 1982 inflation adjusted to today?) At least that was the reason, why Gayner hadn't bought it beginning of 1980ies.
2. Buffett wasn't talking other people into BRK. No Marketing.
3. Insurance is boring. Nifty Fifty were the cool stuff. Japan. Tiger states. New Market. "It's not fancy talking about an insurance stock on a cocktail party". 
4. Relatively high price of BRK in terms of e. g. PB Ratio. If you don't understand the business, you might think there's reversion to the mean. Although pb ratio was below 2.0 pb ratio for most of the time, the average insurance stock was valued way cheaper on average. I know a bit about insurance because of Warren and his idea of float and its value. I think before Buffett, this was hardly discussed. There was just no Berkshire before Berkshire (btw: Was Davis well known in the 80ies and 90ies?!).
5. As far as I know the "Buffett hype" began more like end of 80ies. Until than there were only little news articles about or from Buffett. I know: There are some famous articles, that are often cited. But there aren't that many in the beginning of the 20 years timeframe we look at here, and they were lost in the noise of the stock market articles. Growth of BRK was very high in the 70ies; but it was a small business. So it needed some time to get big. People don't write and read a lot about mid caps.
6. Looking back, it's incomprehensible, that BRK wasn't more expensive. But there was a premium for Berkshire compared to other insurers; it just wasn't high enough from today's perspective.
7. Today the "Buffett System" is known and discussed in depth and very broadly. That wasn't the case beginning of the 80ies.
8. I think Quality investing was rather unknown and not as widespread as it is today. People were reluctant to pay a premium on the price, even if the company was good. Look at Berkshire itself: Munger had to talk Buffett into quality. This more a "grey" argument, but I think today there's more quality investment investors (especially after the financial crisis).
9. The investments Berkshire did in the early years weren't quality. If you're a quality investor, you might have had a look to BRK, but if the investments within BRK weren't felt "quality" (but the opposite), and you had to pay a premium, that doesn't go together very well.
10. 1980 BRK under Buffett had a track record of 13 years, 1990 23 years and 2000 33 years. Looking at myself I want to see a longtime track record. 23 years seems to be a minimum. There are a lot of people not buying Fairfax and Markel as those are not "old businesses" having a track record of only 38 years. Those 38 year old businesses are called "Baby Berkshires". I guess, a 13, 23 (and even 33 years) track record isn't long enough for a lot of people. 
11. BRKs stock price sometimes went down over 50% (was it three times from 1970 to 1990? Unsure, but sometimes that happened). So BRK wasn't like a steady winner in each and every year (there weren't a lot of steady winners in those years I guess). People don't like volatility. And they don't like to pay a premium, if e. g. 5 years before, the stock was valued at a similar premium and lost 50 percent.
12. The Buffett system is known and understood very well - today. Float plus Value investing plus a small team plus investing a bigger part into equity (and into wholly owned businesses). Buying back stock. Owning (and buying) assets and stocks with hidden value (like Blue stamps). If you don't understand the power of float etc. you just don't buy it.
13. In the 1970s, there was still the textile business, and this industry was (certainly visible to many investors) in serious crisis. The restructuring took some time. It's perhaps like Fairfax and Blackberry: what didn't go so well lingers in the memory for a long time.
14. At the end of the 1970s, Berkshire also had problems with its insurance business and suffered major underwriting losses.
15. From 1973 to 1975, the share price halved (see also above).
16. Many investors love simple business stories. A bank, a car manufacturer, an energy company. Berkshire had a newspaper, an insurance business, textile companies, Blue Chip Stamps and sweets, etc. Many investors will have been put off by this smorgasbord.
17. Again the track record beginning of 80ies and 90ies: Berkshire wasn't easy to understand, as ist changed all the time. From Textile to insurance and other ingredients. And then from value investments to quality ones. So when only looking in the rearview mirror in the 80ies and early 90ies, those returns always came from another episode, that just lied behind and weren't giving any information about the future. So you had to bet on the jockey and his ability, rather than on an intact investment story over X decades.
18. Maybe float of BRK stock wasn't big enough for big investors to buy in?

19. Institutional imperative: It's hard to buy something so special. If you're wrong, investors will ask you, why you bought such a (dubious) thing at a premium, that's not part of a big index.

My best guess is, that it's a combination of all those and a lot of (!) other factors.

My overall thinking is a bit like this:

Any company with an ROE of, say, 18% (this is just a random example) that can reinvest at the same rate will double its book value and more or less its share price every four years. That's a 128-bagger after 28 years (since 1997 until today), a 256-bagger after 32 years (since 1993), a 512-bagger after 36 years (since 1989) and a 1,024-bagger after 40 years (since 1985). It is evident that the further back you go with such extreme ROEs, the clearer it becomes that even unimaginable purchase prices would still yield very good returns. The initial price in any share with such returns appears absurdly low after 2 decades and more. So when your question is asked after X decades, we think: "It must have been so obvious. One could have paid multiple times the price and it would have been a great investments still. Why hasn't anyone seen it?"

You could probably have paid ten times the price for Fairfax Financial in 1986, and it would still be among the top 1% or 5% of the best share investments.

I just want to point out, that such extraordinary returns make the question of yours more fascinating, while at the same time, we as investors often just don't understand the power of compounding in every moment (think: "Today"). Every investment with 15+% returns will give us back so much over time, that 20, 30 years from know, it seems like a no-brainer to buy this stock, if we look back.

But in any moment there's so much noise. People talk about Bitcoin, Military stocks, AI etc. But there will come peace and after AI there will be Quantencomputer; and maybe that will turn around tech totally or it might be the end of Bitcoin too etc.

Still people think they know, how live will end up in 20 years. And they think, if there appears a fancy new technology, a new topic, that investing into any of those new tech stocks will bring extraordinary returns. But that's wrong most of the time. Who invested into internet stocks in the dot com bubble was right, that the internet would change our live totally. But 99 of 100 of those business models weren't good. It was the same with railway. That were very bad investments, while people were right, that its transport capibillty and the speed would change the world dramatically. But people always think they can pick the winners within those fancy sectors. It's a bias.

So those interested in stock market more often than not are "gamblers". They like the adrenaline. That's why they head to the stock market. And I think Berkshire wasn't fancy. Insurance. Hard to understand. Boring. Textile business. Oh my god! Really? Blue Chip stamps. Boring. Candy. I like it, but that's something for my kids. I could invest into Japan, there's so much going on in Tokyo these days. Newspaper? That's 100 years old. What's the story? That's boring. Japan sounds fancy. They don't even pay a dividend? And where's the stock price? What? 4.000 dollar??? 20.000 dollar??? For candy, Blue chip Stamps, Insurance and Textile businesses? Sorry I am out. That can't go up any more.

18% per year over 30 isn't fancy. A 100% return per year over 2 years and a cool AI story is. 

The irony is, Berkshire and Buffett are almost as unloved today as they were back then, even by some here on this board.  We all know the "reasons".  But someone (anyone) point to a better long-term steward of your capital.  

[Hamburg Investor]

1 hour ago, 73 Reds said:

The irony is, Berkshire and Buffett are almost as unloved today as they were back then

@73 Reds: Totally agree! 
 

So what can we learn?

1. Good returns can be done in boring areas, not the fancy ones!

2. It wasn’t that obvious to invest in BRK 13 or 23 years after Buffett took over. You had to a. understand the business concept (float etc.) and b. be happy with only 1 or 2 decades of business history in c. a situation where the Berkshire of - say - 1985 wasn‘t the same than the one from 1980, which was very different from the one 1975, which was major different from when Buffett took over.

 

So you had to understand the float concept, which was just implemented over time along the way, trust the jockey, and have the guts to invest into something „new“, that changed continuously. And there was no „older version“ of Berkshire, like we have today, when watchibg the Berkalikes.
 

People weren’t dumb and we are not better today than people were in the 80ies. 
 

Basically I see Fairfax today as a bit of a similar opportunity. Of course Buffett is not Watsa and today isn’t the 80ies. That’s not my point. But the concept rhymes and the situation. Fairfax is I think as big as BRK was in the 90ies, Watsa knows about the power of float, invests equity into stocks, is a value investor, pays nearly no dividend, knows a thing about culture, has a small team at the head office… Both companies (and Markel) are within the best stock performers since present management took over. Well, from my perspective, that’s not totally different. 

[Munger_Disciple]

My guess is that most people who bought & never sold BRK aren't professional or institutional investors analyzing the company to death. They were/are simply either Buffett's original partners who received the stock when he closed down his fund in 1969 or folks who liked, admired & trusted Buffett and felt that he would treat the shareholders honestly & fairly. Plus they were comforted by the fact that he had virtually 100% of his net worth in the stock. Therefore they just bought the stock and never sold come hell or high water.

Just my 2c. 

Edited October 13, 2025 by Munger_Disciple

[73 Reds]

1 hour ago, Hamburg Investor said:

@73 Reds: Totally agree! 
 

So what can we learn?

1. Good returns can be done in boring areas, not the fancy ones!

2. It wasn’t that obvious to invest in BRK 13 or 23 years after Buffett took over. You had to a. understand the business concept (float etc.) and b. be happy with only 1 or 2 decades of business history in c. a situation where the Berkshire of - say - 1985 wasn‘t the same than the one from 1980, which was very different from the one 1975, which was major different from when Buffett took over.

 

So you had to understand the float concept, which was just implemented over time along the way, trust the jockey, and have the guts to invest into something „new“, that changed continuously. And there was no „older version“ of Berkshire, like we have today, when watchibg the Berkalikes.
 

People weren’t dumb and we are not better today than people were in the 80ies. 
 

Basically I see Fairfax today as a bit of a similar opportunity. Of course Buffett is not Watsa and today isn’t the 80ies. That’s not my point. But the concept rhymes and the situation. Fairfax is I think as big as BRK was in the 90ies, Watsa knows about the power of float, invests equity into stocks, is a value investor, pays nearly no dividend, knows a thing about culture, has a small team at the head office… Both companies (and Markel) are within the best stock performers since present management took over. Well, from my perspective, that’s not totally different. 

@Hamburg Investor what you and others have stated here are all factors because for the most part Wall Street and stock picking remains one big casino.   In the US 401k plans work great if employees steadfastly make maximum contributions to a diversified, broad-based equity index fund with little fees and costs.  However this too is "boring" and also requires discipline and less money for instant gratification so the likelihood is that far too few folks do it for their employment lifetimes.   The people who discovered Berkshire and Buffett back then had a different mindset than most and still do.  

[Buckeye]

3 hours ago, 73 Reds said:

The irony is, Berkshire and Buffett are almost as unloved today as they were back then, even by some here on this board.  We all know the "reasons".  But someone (anyone) point to a better long-term steward of your capital.  

[schin]

I doubt many would hold a position that long (10+ years)... two, if they did hold, would they pare down the position as it increased as a percentage of their overall portfolio (25%+) from over concentration.... If you considered those two factors, plus the shiny dot.com, technology, retail, AI, bitcoin temptations.... most people won't have a fighting chance.

 

Lastly, what if you were a bigger fan of Charlie Munger than Warren and invested in Wesco or Daily Journal, I am not sure if you would have gotten as good of a return.

[Viking]

18 hours ago, Williams406 said:

I was in an office book club that read Intelligent Investor circa 1998. I had heard of Buffett and Berkshire and that book prompted me to take my first position in BRK--hard to believe it has been nearly 30 years for me. Added on significantly toward the end of 1999 with massive adds in Spring of 2009. The narrative in the late 90's was that Buffett was stodgy, old-fashioned, and out of date. He had no strategy to capitalize on the internet for Pete's sake so Berkshire was viewed as the equivalent of a buggy-whip manufacturer. During that era, I think that narrative served as a major reason for people avoiding Berkshire investment. During the GFC, I think many market participants were selling anything not nailed down. More generally, BRK's diverse ops and holdings don't lend themselves to any kind of story or hook. Berkshire isn't really a "play" on anything other than investing competence over decades.

I discovered Buffett in the early to mid-1990’s. I think he and Berkshire Hathaway were pretty well know by then. Hagstrom released his book ‘The Warren Buffett Way’ in 1995. I think the consensus view at the time was that Buffett was old school / likely past his prime. To your point, this was DEFINITELY the view in 1998 / 1999. Anything that wasn’t .com was avoided/shunned. 
 

I have invested in BRK over the years. And done reasonably well each time. But they were usually small positions and sold after a nice pop in price. With hindsight, I made a bunch of mistakes. 

But I do owe Warren Buffett a huge debt of gratitude. Buffett got me hooked on value investing as a framework. And that lead me to ‘the Corner of Berkshire and Fairfax’ in about 2003. And that lead me to Fairfax. And the other members of this wonderful forum. 22 years later the results have been magic. Funny how things work out sometimes  

 

Edited October 14, 2025 by Viking

[Viking]

14 hours ago, Hamburg Investor said:

My thoughts:
1. High price of one share. One share cost over 1.000 dollar most of the time (not in 1980 and 1981 or so). People don't like to buy shares that are so high. It's a bias. But people don't like buying penny stocks and they either don't like buying a stock for 1.000 dollar (how much is that 1.000 dollar from around 1982 inflation adjusted to today?) At least that was the reason, why Gayner hadn't bought it beginning of 1980ies.
2. Buffett wasn't talking other people into BRK. No Marketing.
3. Insurance is boring. Nifty Fifty were the cool stuff. Japan. Tiger states. New Market. "It's not fancy talking about an insurance stock on a cocktail party". 
4. Relatively high price of BRK in terms of e. g. PB Ratio. If you don't understand the business, you might think there's reversion to the mean. Although pb ratio was below 2.0 pb ratio for most of the time, the average insurance stock was valued way cheaper on average. I know a bit about insurance because of Warren and his idea of float and its value. I think before Buffett, this was hardly discussed. There was just no Berkshire before Berkshire (btw: Was Davis well known in the 80ies and 90ies?!).
5. As far as I know the "Buffett hype" began more like end of 80ies. Until than there were only little news articles about or from Buffett. I know: There are some famous articles, that are often cited. But there aren't that many in the beginning of the 20 years timeframe we look at here, and they were lost in the noise of the stock market articles. Growth of BRK was very high in the 70ies; but it was a small business. So it needed some time to get big. People don't write and read a lot about mid caps.
6. Looking back, it's incomprehensible, that BRK wasn't more expensive. But there was a premium for Berkshire compared to other insurers; it just wasn't high enough from today's perspective.
7. Today the "Buffett System" is known and discussed in depth and very broadly. That wasn't the case beginning of the 80ies.
8. I think Quality investing was rather unknown and not as widespread as it is today. People were reluctant to pay a premium on the price, even if the company was good. Look at Berkshire itself: Munger had to talk Buffett into quality. This more a "grey" argument, but I think today there's more quality investment investors (especially after the financial crisis).
9. The investments Berkshire did in the early years weren't quality. If you're a quality investor, you might have had a look to BRK, but if the investments within BRK weren't felt "quality" (but the opposite), and you had to pay a premium, that doesn't go together very well.
10. 1980 BRK under Buffett had a track record of 13 years, 1990 23 years and 2000 33 years. Looking at myself I want to see a longtime track record. 23 years seems to be a minimum. There are a lot of people not buying Fairfax and Markel as those are not "old businesses" having a track record of only 38 years. Those 38 year old businesses are called "Baby Berkshires". I guess, a 13, 23 (and even 33 years) track record isn't long enough for a lot of people. 
11. BRKs stock price sometimes went down over 50% (was it three times from 1970 to 1990? Unsure, but sometimes that happened). So BRK wasn't like a steady winner in each and every year (there weren't a lot of steady winners in those years I guess). People don't like volatility. And they don't like to pay a premium, if e. g. 5 years before, the stock was valued at a similar premium and lost 50 percent.
12. The Buffett system is known and understood very well - today. Float plus Value investing plus a small team plus investing a bigger part into equity (and into wholly owned businesses). Buying back stock. Owning (and buying) assets and stocks with hidden value (like Blue stamps). If you don't understand the power of float etc. you just don't buy it.
13. In the 1970s, there was still the textile business, and this industry was (certainly visible to many investors) in serious crisis. The restructuring took some time. It's perhaps like Fairfax and Blackberry: what didn't go so well lingers in the memory for a long time.
14. At the end of the 1970s, Berkshire also had problems with its insurance business and suffered major underwriting losses.
15. From 1973 to 1975, the share price halved (see also above).
16. Many investors love simple business stories. A bank, a car manufacturer, an energy company. Berkshire had a newspaper, an insurance business, textile companies, Blue Chip Stamps and sweets, etc. Many investors will have been put off by this smorgasbord.
17. Again the track record beginning of 80ies and 90ies: Berkshire wasn't easy to understand, as ist changed all the time. From Textile to insurance and other ingredients. And then from value investments to quality ones. So when only looking in the rearview mirror in the 80ies and early 90ies, those returns always came from another episode, that just lied behind and weren't giving any information about the future. So you had to bet on the jockey and his ability, rather than on an intact investment story over X decades.
18. Maybe float of BRK stock wasn't big enough for big investors to buy in?

19. Institutional imperative: It's hard to buy something so special. If you're wrong, investors will ask you, why you bought such a (dubious) thing at a premium, that's not part of a big index.

My best guess is, that it's a combination of all those and a lot of (!) other factors.

My overall thinking is a bit like this:

Any company with an ROE of, say, 18% (this is just a random example) that can reinvest at the same rate will double its book value and more or less its share price every four years. That's a 128-bagger after 28 years (since 1997 until today), a 256-bagger after 32 years (since 1993), a 512-bagger after 36 years (since 1989) and a 1,024-bagger after 40 years (since 1985). It is evident that the further back you go with such extreme ROEs, the clearer it becomes that even unimaginable purchase prices would still yield very good returns. The initial price in any share with such returns appears absurdly low after 2 decades and more. So when your question is asked after X decades, we think: "It must have been so obvious. One could have paid multiple times the price and it would have been a great investments still. Why hasn't anyone seen it?"

You could probably have paid ten times the price for Fairfax Financial in 1986, and it would still be among the top 1% or 5% of the best share investments.

I just want to point out, that such extraordinary returns make the question of yours more fascinating, while at the same time, we as investors often just don't understand the power of compounding in every moment (think: "Today"). Every investment with 15+% returns will give us back so much over time, that 20, 30 years from know, it seems like a no-brainer to buy this stock, if we look back.

But in any moment there's so much noise. People talk about Bitcoin, Military stocks, AI etc. But there will come peace and after AI there will be Quantencomputer; and maybe that will turn around tech totally or it might be the end of Bitcoin too etc.

Still people think they know, how live will end up in 20 years. And they think, if there appears a fancy new technology, a new topic, that investing into any of those new tech stocks will bring extraordinary returns. But that's wrong most of the time. Who invested into internet stocks in the dot com bubble was right, that the internet would change our live totally. But 99 of 100 of those business models weren't good. It was the same with railway. That were very bad investments, while people were right, that its transport capibillty and the speed would change the world dramatically. But people always think they can pick the winners within those fancy sectors. It's a bias.

So those interested in stock market more often than not are "gamblers". They like the adrenaline. That's why they head to the stock market. And I think Berkshire wasn't fancy. Insurance. Hard to understand. Boring. Textile business. Oh my god! Really? Blue Chip stamps. Boring. Candy. I like it, but that's something for my kids. I could invest into Japan, there's so much going on in Tokyo these days. Newspaper? That's 100 years old. What's the story? That's boring. Japan sounds fancy. They don't even pay a dividend? And where's the stock price? What? 4.000 dollar??? 20.000 dollar??? For candy, Blue chip Stamps, Insurance and Textile businesses? Sorry I am out. That can't go up any more.

18% per year over 30 isn't fancy. A 100% return per year over 2 years and a cool AI story is. 

@Hamburg Investor, that was a great post. Thanks for taking the time to pack it full of interesting thoughts. It really highlights how many things can throw an investor off a great opportunity - even when it is staring them in the face/obvious. I especially liked the point about how much Berkshire Hathaway was changing over the decades. 

Edited October 14, 2025 by Viking

[Viking]

11 hours ago, Hamburg Investor said:

Basically I see Fairfax today as a bit of a similar opportunity. Of course Buffett is not Watsa and today isn’t the 80ies. That’s not my point. But the concept rhymes and the situation. Fairfax is I think as big as BRK was in the 90ies, Watsa knows about the power of float, invests equity into stocks, is a value investor, pays nearly no dividend, knows a thing about culture, has a small team at the head office… Both companies (and Markel) are within the best stock performers since present management took over. Well, from my perspective, that’s not totally different. 

Bingo. Fairfax is not a clone of Berkshire Hathaway (and it is not trying to be). But Fairfax is the closest thing today that investors will be able to find to a much younger Berkshire Hathaway. This should allow Fairfax to compound capital at above average rate of return - with the prospect that returns could be even better. 
 

I think the one thing that slowed BRK’s compounding was the size of the company. Fairfax doesn’t have that problem. And given Fairfax will sell stuff (if/when it makes sense) and is very aggressive with share buybacks, I don’t think size is going to be a problem any time soon. 

Edited October 14, 2025 by Viking

[Viking]

10 hours ago, Munger_Disciple said:

My guess is that most people who bought & never sold BRK aren't professional or institutional investors analyzing the company to death. They were/are simply either Buffett's original partners who received the stock when he closed down his fund in 1969 or folks who liked, admired & trusted Buffett and felt that he would treat the shareholders honestly & fairly. Plus they were comforted by the fact that he had virtually 100% of his net worth in the stock. Therefore they just bought the stock and never sold come hell or high water.

Just my 2c. 

@Munger_Disciple Great points. Two posts that I plan to write on Fairfax are:

1. Treats shareholders honestly and fairly.
2. Virtually 100% of his net worth is in the stock.

Both of these points are very important. And are largely ignored by investors and analysts.

Edited October 14, 2025 by Viking

[bookie71]

23 hours ago, 73 Reds said:

The irony is, Berkshire and Buffett are almost as unloved today as they were back then, even by some here on this board.  We all know the "reasons".  But someone (anyone) point to a better long-term steward of your capital.  

I believe that a lot of it was that brokers didn't get a big commission on the stock. I know that I was talked out of buying it in my account when I first started investing. I had enough for 10 shares at about 600. I later became much more sure of myself and bought some at 1900. Remember back then brokers liked to churn accounts and every transaction had a huge commission attached to it 

[redskin]

On 10/13/2025 at 7:27 AM, thowed said:

Not much to add to the above - I don't think anybody I know/knew with money back then managed their own funds - all outsourced to 'experts' who would charge a lot to benchmark hug, because lack of information made it easy to get away with.

 

Suspect BRK wasn't esp. popular with fund managers as there were no brokers getting paid or lunched by BRK people to help promote it.

 

I always like being reminded how lucky I am to have resources like this site, Substack etc. as otherwise would be reliant on ropey fund managers & I might not even know about Vanguard.

I haven't explored Substack.  Where do you go within Substack?

[DooDiligence]

2 hours ago, redskin said:

I haven't explored Substack.  Where do you go within Substack?

 

Substack is a platform for authors / content providers.

 

Here's a substack on the semiconductor industry,

https://semianalysis.com/dylan-patel/

 

Here's a substack on substack,

https://on.substack.com

 

 

Usually the first page you land on will ask you to put in your email address, but you can click "no thanks" and it will take you to the authors homepage. Some of the content will give you a teaser of current articles with a subscription required to read more. Most authors provide free full older articles. If you like what you read, you can subscribe and pay for more current articles.

 

 

 

.

Edited October 15, 2025 by DooDiligence