« you really just have to find your passion in life. Warren says to find the the job you would do if you didn’t need a job. The earlier you find that, the better – because it won’t seem like a chore to follow your dream, and you’ll outwork everyone in the process. Don’t be afraid to fail. In fact, you kind of want to fail early and often because it doesn’t cost you much when you’re young – and you learn a lot more from failure than success. »
I found it reading this good BBG article on how Combs was a key in setting up the partnership between Berkshire Hathaway,Amazon and JPMorgan.
« I am a biography nut [myself]. And I think when you’re trying to teach the great concepts that work, it helps to tie them into the lives and personalities of the people who developed them. I think you learn economies better if you make Adam Smith your friend. That sounds funny, making friends among ‘the eminent dead,’ but if you go through life making friends with the eminent dead who had the right ideas, I think it will work better for you in life and work better in education. It’s way better than just giving the basic concepts. »
Sauce: Poor Charlie’s Almanack, Expanded Third Edition, 2005
Facts: Cash & cash equivalents at Berkshire Hathaway (BRK) reached $116 billion at the end of 2017, compared with $86.4 billion at the start of the year. Per Morningstar’s Gregg Warren estimates, Buffett finds himself with « around $90 billion in dry powder that could be committed to investments, acquisitions, share repurchases and dividends. » Continuer la lecture de « What Options for Buffett Who Has $90 Billion To Invest? »
Numbers are staggering. Berkshire Hathaway, the holding chaired by Warren Buffett and Charlie Munger, earned $44.94 billion last year vs $24.07 billion in 2016, in large part thanks to tax cuts decided by the Trump administration. Operating earnings actually declined to $14.46 billion from 17.58 billion a year ago, mainly because the insurance business lost money. Tax cut contributed $29.11 billion to results, which « derives from a reduction of net deferred income tax liabilities that arose as a result of the reduction in the U.S. corporate income tax rate from 35% to 21%. »
A more meaningful number for understanding the valuation of BRK is the evolution of the net asset per share or book value per share. Last year, the number grew 23% to $211,750, outperforming S&P 500 by 1.2%. CAGR return for book value per share over 1965-2017 is 19.1% vs 9.9% for S&P 500. Patience, discipline, opportunistic approach, great deal of focus on price and knowing his circle of competence explain such an amazing performance.
The most important part of BRK release of its annual report is Buffett’s letter to shareholder. This year, Buffett covers the following topics :
This is a classic read although rather unusual. I had the chance to attend a presentation by James Montier (now at GMO) at a Morningstar conference in Amsterdam a couple of years ago. In his intro, Daniel Needham unearthed his note on happiness. Although it probably has little to do with value investing, it is interesting to see that as an equity strategist at DkW, Montier had the liberty to write on such an important topic in life…
Ok. Now stop everything you’re doing and take 50 min of your time listening to Charlie Munger. Mr Munger is the most amazing person to listen to about life, human values and of course investing. If you want to know/feel the guy, read a great biography by Janet Low.
For those unfamiliar with Seth Klarman, he is the founder of the Baupost Group, and one of the most respected and admired value investors. I think it’s both because of his track record, his core values as an investor (patience and discipline among others) but also his humanitarian values that put him on par with Warren Buffett and Charlie Munger.
His words/remarks/interviews are very rare, so any opportunity to hear/read him is a fantastic one for investors willing to improve their process/thinking about investing/life in general.