Do you think Buffett falls into this as well? Specifically thinking KO, BAC, and Apple. He was/is fairly vocal about these companies. He, too, I think may get stuck in a position that he was public about.
Hi, keep in mind Buffett was strongly opposed to marking IBM to market because he intended to hold it, very long term, and there was little chance brk would realize a loss on the position. Obviously , the SEC turned out to be correct challenging Buffett on his position, and Buffett ultimately changed his thinking on holding ibm, forever.
What I find interesting is that he didn’t respond by deciding to avoid “tech” and made the investment in Apple. Of course, he says that Apple is more of a consumer products company but of course the foundation is tech.
I don’t recall the IBM/SEC issue .. will look that up, thanks.
Buffetts position was that being required to mark positions was an accounting nuisance and it wasn't material. That may have been the first time in over 20 years of following Buffett and owning brk that I thought he was being arrogant. The SEC was right but I doubt Buffett is a fan of marking positions, to this day. Be well.
Years ago on the Fools board several posters shared their brk option trades when the options were even less liquid than they are now. I often wondered if they were market makers in the options taking advantage of the large spreads? Hopefully that wasn’t the case but sharing those trades in public was foolish.
When I look at the overall trajectory of revenues, profitability, cash flow, and shares outstanding, it’s hard to see the mistakes. I’m thinking PCC and KHC, seems like they were ‘mistakes’ and are like rounding errors at this point, I can’t tell if those mistakes damaged anything.
Buffett has said in public forums that in his mind, these were valuation mistakes. Privately, he once said that overpaying for a “good” company will delay your profits but that over time, you will do alright (or words to that effect). My impression from his public comments is that he thinks his investments in PCC and KHC will benefit BRK over time but that the benefit would have been greater if he had paid lower prices for each.
The mistakes kind of fade away in importance but I’m sure it still stings for Buffett. A few years ago, he was beating himself up for issuing Berkshire shares for a shoe company acquisition in the early 1990s.
So many good nuggets in here. Investors, myself included, may invest in a company based on certain factors and then when those change you can talk yourself into it, public or not. How many people are invested in Berkshire solely because Buffett is there. They write off his mistakes, because he is there. WHEN the next CEO makes a large mistake, do those same ppl give the CEO a pass or not.
There's no doubt that many investors in Berkshire are there because of Warren Buffett and give him more latitude than any other CEO. That is well deserved in his case. A good example is the IBM investment, much of which was made at a time when Berkshire itself was cheap but Berkshire's repurchase policy make it extremely hard to repurchase shares. Buffett investing in IBM rather than repurchasing Berkshire was not a great decision. But shareholders mostly gave him a pass. Then Apple comes along and the IBM mistake was more than made up for.
It will be interesting to see how shareholders react to the first major mistake Greg Abel makes, and there will inevitably be mistakes. I'm going to try to view such mistakes in the context of Abel's overall record at Berkshire which spans over twenty years rather than viewing him as the "new guy" in the CEO chair. But I don't know what I'll think for sure until the time comes...
Do you think Buffett falls into this as well? Specifically thinking KO, BAC, and Apple. He was/is fairly vocal about these companies. He, too, I think may get stuck in a position that he was public about.
It’s possible but if we look at IBM, he reversed course on that after being vocal about it.
Hi, keep in mind Buffett was strongly opposed to marking IBM to market because he intended to hold it, very long term, and there was little chance brk would realize a loss on the position. Obviously , the SEC turned out to be correct challenging Buffett on his position, and Buffett ultimately changed his thinking on holding ibm, forever.
What I find interesting is that he didn’t respond by deciding to avoid “tech” and made the investment in Apple. Of course, he says that Apple is more of a consumer products company but of course the foundation is tech.
I don’t recall the IBM/SEC issue .. will look that up, thanks.
Buffetts position was that being required to mark positions was an accounting nuisance and it wasn't material. That may have been the first time in over 20 years of following Buffett and owning brk that I thought he was being arrogant. The SEC was right but I doubt Buffett is a fan of marking positions, to this day. Be well.
Years ago on the Fools board several posters shared their brk option trades when the options were even less liquid than they are now. I often wondered if they were market makers in the options taking advantage of the large spreads? Hopefully that wasn’t the case but sharing those trades in public was foolish.
Good thoughts here. Mental note taken. Thank you!
When I look at the overall trajectory of revenues, profitability, cash flow, and shares outstanding, it’s hard to see the mistakes. I’m thinking PCC and KHC, seems like they were ‘mistakes’ and are like rounding errors at this point, I can’t tell if those mistakes damaged anything.
Buffett has said in public forums that in his mind, these were valuation mistakes. Privately, he once said that overpaying for a “good” company will delay your profits but that over time, you will do alright (or words to that effect). My impression from his public comments is that he thinks his investments in PCC and KHC will benefit BRK over time but that the benefit would have been greater if he had paid lower prices for each.
The mistakes kind of fade away in importance but I’m sure it still stings for Buffett. A few years ago, he was beating himself up for issuing Berkshire shares for a shoe company acquisition in the early 1990s.
So many good nuggets in here. Investors, myself included, may invest in a company based on certain factors and then when those change you can talk yourself into it, public or not. How many people are invested in Berkshire solely because Buffett is there. They write off his mistakes, because he is there. WHEN the next CEO makes a large mistake, do those same ppl give the CEO a pass or not.
There's no doubt that many investors in Berkshire are there because of Warren Buffett and give him more latitude than any other CEO. That is well deserved in his case. A good example is the IBM investment, much of which was made at a time when Berkshire itself was cheap but Berkshire's repurchase policy make it extremely hard to repurchase shares. Buffett investing in IBM rather than repurchasing Berkshire was not a great decision. But shareholders mostly gave him a pass. Then Apple comes along and the IBM mistake was more than made up for.
It will be interesting to see how shareholders react to the first major mistake Greg Abel makes, and there will inevitably be mistakes. I'm going to try to view such mistakes in the context of Abel's overall record at Berkshire which spans over twenty years rather than viewing him as the "new guy" in the CEO chair. But I don't know what I'll think for sure until the time comes...