Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf] • Hacker News Board

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#201

Post by bbcbasic » Sat, Feb 25, 2017, 8:08 PM UTC

vkreso wrote: post #199

dsacco wrote: post #17

There's one particular passage I'd like to point out, on page 5: Our efforts to materially increase the normalized earnings of Berkshire will be aided – as they have been throughout our managerial tenure – by America’s economic dynamism. One word sums up our country’s achievements: miraculous. From a standing start 240 years ago – a span of time less than triple my days on earth – Americans have combined human ingenu…

I must say that I also feel proud and I'm not even American!

Every country can be proud of their achievements. The success is powered by science, human ingenuity and risk taking, all over the world.

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#202

Post by throwaway2048 » Sat, Feb 25, 2017, 8:12 PM UTC

austenallred wrote: post #189

jdavis703 wrote: post #29

Earlier quoted context omitted.

they all represent a net gain for Americans from the barren lands, primitive structures and meager output of 1776. Starting from scratch, America has amassed wealth totaling $90 trillion. This was a gain that was achieved not by starting from scratch but by stealing lands from indigenous people and forcing Africans to work that land. I'm not sure if you can describe the kidnapping, murder, rape and ultimately genocid…

While I think it's important to not neglect the horrors of slavery and the theft of lands from indigenous peoples, it's disingenuous to imply that the sole (or a major) cause of America's current and continuous booming economy was either of these. The easiest way to dispel this notion is to show that the vast, vast majority of American wealth (>99%) came about long after slavery had ended. Indeed, if we could return…

Microsoft might have billions of lines of code today, but they would be precisely nowhere without the few K-lines of code that composed microsoft basic for the altair.

Its misleading to say that 99%+ of american wealth occured long after slavery etc ended, because it still started there.

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#203

Post by friedman23 » Sat, Feb 25, 2017, 8:13 PM UTC

jdavis703 wrote: post #29

dsacco wrote: post #17

There's one particular passage I'd like to point out, on page 5: Our efforts to materially increase the normalized earnings of Berkshire will be aided – as they have been throughout our managerial tenure – by America’s economic dynamism. One word sums up our country’s achievements: miraculous. From a standing start 240 years ago – a span of time less than triple my days on earth – Americans have combined human ingenu…

they all represent a net gain for Americans from the barren lands, primitive structures and meager output of 1776. Starting from scratch, America has amassed wealth totaling $90 trillion. This was a gain that was achieved not by starting from scratch but by stealing lands from indigenous people and forcing Africans to work that land. I'm not sure if you can describe the kidnapping, murder, rape and ultimately genocid…

> This was a gain that was achieved not by starting from scratch but by stealing lands from indigenous people

Seeing as how you are saying that the growth of America was dependent on 'stealing' land you must be implying that the success is dependent on the stealing of resources.

Which is trivially proven false by simply looking at South America.

> forcing Africans to work that land

Forcing Africans to work the land stunted American growth. It's not a coincidence that the richest parts of the countries are the ones that industrialized.

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#204

Post by gizmo » Sat, Feb 25, 2017, 8:14 PM UTC

tptacek wrote: post #186

gizmo wrote: post #181

Earlier quoted context omitted.

Perhaps it is fashionable to point that out where you live, but common wisdom I hear is "everybody should just use index funds", without stopping to ask what would happen if everybody actually did. Worldwide equities are 65 trillion or so. Can you have a functioning stock market if 1T of that is actively managed by prop traders and the remaining 64T is in passive index funds? I'm not so sure.

Now you're talking past me. It does not follow from the fact that active investment is necessary that people should invest with active investors. Again, fierce competition among active investors can --- and probably have --- created conditions where all the returns on active investing will go to (effectively) proprietary traders.

I don't think I'm talking past you -- your previous point was perfectly clear. You literally cannot have active investments if nobody invests with active investors or actively manages their funds themselves. This is tautological. So somebody has to invest with active investors, but Buffett is arguing it should be somebody else and not you.

If 99.99% of all assets are locked up in buy-and-hold passive index funds the prop traders can't do anything when a stock is mispriced because they can only trade with the handful of active investors that remain. With 65 trillion in equities a handful of prop traders can jump high and low all they want but the markets won't budge if nobody is buying or selling. The index managers on the other hand will be able to move markets with a keystroke, because whenever they decide that one stock in the index has to be replaced by another all the index fund money blindly follows.

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#205

Post by losteverything » Sat, Feb 25, 2017, 8:18 PM UTC

dsacco wrote: post #17

There's one particular passage I'd like to point out, on page 5: Our efforts to materially increase the normalized earnings of Berkshire will be aided – as they have been throughout our managerial tenure – by America’s economic dynamism. One word sums up our country’s achievements: miraculous. From a standing start 240 years ago – a span of time less than triple my days on earth – Americans have combined human ingenu…

>It is refreshing to hear from a source...

I agree and thanks for sharing.

The biggest challenge now for me with free time is read from those types of sources. Or to just stay off my phone!!!!!

The joy of reading is under attack.

When my parent got near death s/he also framed a very patriotic life full of optimism.

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#206

Post by tptacek » Sat, Feb 25, 2017, 8:22 PM UTC

gizmo wrote: post #204

tptacek wrote: post #186

Earlier quoted context omitted.

Now you're talking past me. It does not follow from the fact that active investment is necessary that people should invest with active investors. Again, fierce competition among active investors can --- and probably have --- created conditions where all the returns on active investing will go to (effectively) proprietary traders.

I don't think I'm talking past you -- your previous point was perfectly clear. You literally cannot have active investments if nobody invests with active investors or actively manages their funds themselves. This is tautological. So somebody has to invest with active investors, but Buffett is arguing it should be somebody else and not you. If 99.99% of all assets are locked up in buy-and-hold passive index funds the…

Nobody has to invest money in prop shops for them to provide market inputs. There are some huge proprietary trading firms.

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#207

Post by scythe » Sat, Feb 25, 2017, 8:23 PM UTC

eropple wrote: post #131

thedevil wrote: post #123

Earlier quoted context omitted.

It's not that it wasn't significant at that time. It's just that in the long-term, it looks small compared to making the value of the labor of the entire population 100x more valuable.

This is true, but most of the economic historians I am aware of also acknowledge that America wouldn't have been in the position to leverage industrialization that it was without the economic driver of slavery. Disentangling them is very difficult and usually smells of a political motive.

>Disentangling them is very difficult and usually smells of a political motive.

Whereas claiming they can't be disentangled is obviously disinterested.

Slavery was the rule, not the exception in the world at the time. The African kingdoms mostly practiced it, the Arabs were infamous for it, Mexico ended slavery in the 1830s after American industrialization was well underway, Russia didn't truly end serfdom until around 1900 as I recall, and then you have India's caste system, so only China is left without slavery in some form? But were they? And why didn't all of these countries industrialize?

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#208

Post by mythrwy » Sat, Feb 25, 2017, 8:26 PM UTC

ajmurmann wrote: post #200

mythrwy wrote: post #174

Earlier quoted context omitted.

That's your opinion but mine is that division requires minimum two parts.

In this situation you are probably right. However, it's very problematic as a general statement. There are too many atrocities committed by violent majorities against powerless minorities that come to mind. This blanket statement gets into victim shaming really quick.

Agreed. Atrocities have happened and will most likely happen again with innocent victims.

But even with violent majorities there is usually a justification of the behavior that somehow involves something the minority party is doing (or not doing) that justifies the action. Not that this makes it any more morally palatable (or true) from an objective viewpoint but the division may exist to be seized upon.

I'd also argue that Trump isn't the cause of division so much as the result of existing divisions some of which are quite old and have been festering.

My last point is I really grow weary of hearing Trump slams. We get it. You don't like Trump. But some people do. Is there any way we could keep this repetitive bleating on Facebook or something? No offense to poster lastlogin. His comment history seems pretty solid, I'm just sick of the Trump slams every third forum.

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#209

Post by pg314 » Sat, Feb 25, 2017, 8:27 PM UTC

gizmo wrote: post #22

pshc wrote: post #19

Earlier quoted context omitted.

With regard to your first sentence, could you give an example of a specific way to hedge capital? I'm not sure I understand.

Suppose you're a business with a lot of positive cash flow, but you also have a lot of exposure to the USD-MXN exchange rate. Maybe you have factories in Mexico but sell to the US, it doesn't matter. In that case you can pay a hedge fund to hedge your money so that if the exchange rate collapses you make enough money on the stock market to compensate, so your business will survive until the exchange rate climbs back.…

> If you make cars then economic recessions are scary because new car sales will drop like a brick, and you need to hedge.

That sounds like a dubious claim to me. Can you name one car maker who hedges their exposure to economic recessions like you describe?

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#210

Post by argigg » Sat, Feb 25, 2017, 8:27 PM UTC

akvadrako wrote: post #86

arjie wrote: post #79

Earlier quoted context omitted.

Renaissance Technologies claims 71% annualised from 1994 to 2014.

It's easy to find funds that had great performance in the past. If anybody knows how to pick those that will perform in the future, they are keeping it a secret. And you might not be able to invest directly in rentec, but their holdings are public [1]. So if they really had a good secret, it could be replicated. [1] https://www.holdingschannel.com/all/stocks-held-by-renaissan...

People have been talking about rentec for a long time, and their gains are larger than would be expected if they were merely the most lucky of a large group of random investments.