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Pandemic market distortion maybe ? Warren and Charlie just getting long in the tooth and slowing down ? Are the up-and-coming managers at BH (are there any ?) calling more of the shots and getting it wrong ?
In its early years, its cash pile was obviously much more modest, and it was easier to find opportunities which would fit Buffett's investment criteria while also moving the needle from an ROI standpoint.
But now that cash pile has grown substantially. It's orders of magnitude harder to find investments which move a $100 billion needle, and Buffett is unwilling to lower his standards such that he can find businesses to spend his cash on.
Hence Berkshire has little other choice but to park its un-deployed assets in relatively low-performing but liquid accounts, ready to invest if needed but otherwise not doing much for the bottom line in the meantime.
TL;DR- Berkshire may be a "victim" of its own success.
As a huge fan of Buffett, I must point to the fact that can materially change this comparison in the years to come: - stock market returns were abnormally high for the past 15 years - Berkshire is sitting on a huge pile of cash, ready to invest This is a very similar scenario to what people were saying in 1999 - Buffett is done etc. I highly recommend reading his biography - "The Snowball" and especially the preface…
I’m not sure either of statements really excuses the underperformance. You either beat the market or you don’t. It’s relative. He could lose money but if he loses less than the broad market, he outperformed. And sitting on a pile of cash is a negative, a lost opportunity. That said 20 years is arbitrary, however it’s not an insignificant period of time. It’s two decades! But my final point is that Buffet isn’t an inv…
Berkshire's huge pile of cash is more than likely the reason for the latter-day under-performance. In its early years, its cash pile was obviously much more modest, and it was easier to find opportunities which would fit Buffett's investment criteria while also moving the needle from an ROI standpoint. But now that cash pile has grown substantially. It's orders of magnitude harder to find investments which move a $10…
Earlier quoted context omitted.
> Mostly because he does not understand it (...) What leads you to believe that he doesn't understand it? I mean, how many tech companies failed/are failing badly? It's easy to single out Microsoft as an example of a success story, but it's even easier to pick failure stories. Perhaps Warren Buffet does well smelling out those?
these are his own words from a few years back I did not make them up . He said as he did not understand he missed out on some good investments
I'm sorry, but that's simply a gross misrepresentation of facts. If you read Warren Buffett's actual comment, it's quite clear that they were about the overall dotcom fever and how the bulk of these companies were objectively not a good investment. If course those who stood to benefit from the dotcom bubble were quick to attack Buffett to discredit him.
https://www.businessinsider.com/why-buffett-doesnt-invest-in...
Berkshire's huge pile of cash is more than likely the reason for the latter-day under-performance. In its early years, its cash pile was obviously much more modest, and it was easier to find opportunities which would fit Buffett's investment criteria while also moving the needle from an ROI standpoint. But now that cash pile has grown substantially. It's orders of magnitude harder to find investments which move a $10…
I know that's essentially what you were saying, I just wanted to clarify it a bit.
So it seems that Buffet, ironically, does not follow his own advice of simply buying an ETF and holding it. Also, I know some "celebrity traders" in Poland who advertise their IKE (think of it like a Polish version of Roth IRA account), where out of 170,000 PLN cash savings over 10-12 years they can get 1,800,000 PLN (for the average return of 37% per year) - how's that for beating the market?
That's not very hard in an economy which has grown as quickly as Poland's. Find another country which will have the same growth for the next 20 years, invest there, and you'll see similar results.
So it seems that Buffet, ironically, does not follow his own advice of simply buying an ETF and holding it. Also, I know some "celebrity traders" in Poland who advertise their IKE (think of it like a Polish version of Roth IRA account), where out of 170,000 PLN cash savings over 10-12 years they can get 1,800,000 PLN (for the average return of 37% per year) - how's that for beating the market?
That's not very hard in an economy which has grown as quickly as Poland's. Find another country which will have the same growth for the next 20 years, invest there, and you'll see similar results.
As a huge fan of Buffett, I must point to the fact that can materially change this comparison in the years to come: - stock market returns were abnormally high for the past 15 years - Berkshire is sitting on a huge pile of cash, ready to invest This is a very similar scenario to what people were saying in 1999 - Buffett is done etc. I highly recommend reading his biography - "The Snowball" and especially the preface…