How Warren Buffett Protégé David Sokol Lost His Way

[saumil]

http://www.businessweek.com/print/magazine/content/11_19/b4227050988120.htm

[scorpioncapital]

"On CNBC, Sokol framed this chronology as beginning with his own investment interests and extending only as an afterthought to Berkshire's. "I'm trying to invest my family's capital," he said, "and if I see a company that I think is interesting and potentially undervalued, to not mention it to Warren, to me, seems inappropriate." As for his own conduct, Sokol said it was blameless. "

 

Trying to invest his family's capital BUT Berkshire stock at $200billion cannot possibly result in a reasonable return, so the 'little' companies Berkshire acquires can offer higher returns. I take this incident as further evidence that Berkshire is a turtle, only slightly beating the S&P over time going forward.

 

 

[Guest]

. I take this incident as further evidence that Berkshire is a turtle, only slightly beating the S&P over time going forward.

 

 

 

But has confirmed this in the past. He has stated that Berkshire will probably only beat the S&P 500 by a couple points over the long term annually. However, let's look at this from a different perspective.

 

Assume that over the next 20 years, Berkshire beats the S&P 500 by 2% a year, which isn't bad.

 

Studies have shown that only about 20% of large cap funds will beat the S&P 500 over a 20 year period. After taxes, it's not unreasonable to think that Berkshire will be in the 10% of large cap investments of a 20 year period. So, you can do virtually no work and probably be in the top 10%. All with probably less volatility.

[beerbaron]

All with probably less volatility.

 

And a ton of cash to protect on the downside!

 

BeerBaron