We should figure out how to get all of WSB into online poker… it would be like the golden age all over again.
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LOL I’ve been super-busy with work the last several days and this thread explodes.
Anyway, I thought this was an interesting question. Berkshire has a very diverse group of operating businesses and equity holdings, so it’s extremely diversified. At the same time, it’s got single-company risk that you can never escape - if they write the wrong set of reinsurance policies or one of their operating subs spills nuclear waste somewhere, there’s no real limit on what liability can attach to Berkshire. (I mean, obviously the company is structured so that each subsidiary is its own separate corporate structure, but I can’t imagine the overall Berkshire Holding Company just saying “LOL sorry” if one of their subs takes on bankruptcy-level liability.)
I think I have something like 25% of my investments in Berkshire right now, and that’s probably too much. It’s tax efficient, due to it’s lack of dividend payments, but that same lack of corporate distributions is also super irritating - I would say that Berkshire should have been paying out its cash over the last 10 years, rather than letting it build up as an anchor on the balance sheet. I think a reasonable expectation for returns is something like 8-10% over the next 5 years, which isn’t all that exciting unless you believe that the aggregate market is going to return substantially less than that. (Which I do.)
As far as other similar companies go, it depends on what you think the important attributes of Berkshire are. Those could be:
- Warren Buffett as a skilled investor.
- The marriage of a large insurance firm providing funding (in the form of float) to cheaply acquire other operating assets.
- A diversified company with no particular industry, just willing to make large opportunistic acquisitions when prices are right.
- Some intangible corporate culture.
I actually don’t think the first three are that unusual. Lots of firms have tried to replicate them with various results. Some examples I can think of are: Eddie Lampert in Sears (LOL); Prem Watsa in Fairfax Financial Holdings; Brookfield Asset Management; David Einhorn in Greenlight Capital (there’s a publicly-traded version of his hedge fudn); Markel Corporation; and Biglari Holdings.
To me, it’s the 4th attribute that I think is most important, and the real question is whether the culture will survive Buffett’s departure. In particular, there are 3 things that I think are embedded in the corporate DNA that potentially give the company a sustainable competitive advantage as long as they’re adhered to:
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A principle of avoiding losing money at all costs. That is, every investment should be made with a primary focus of not losing capital. If you can value companies well enough and only buy them when you’re extraordinarily unlikely to lose money, you’re almost guaranteed to outperform.
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A willingness to sit markets and industries out when prices are inappropriate. This is most important in insurance - you have to have the willingness to say no to insurance policies that aren’t priced sufficiently high. And this can’t just be something you say - you have to build it into compensation contracts to make sure that managers don’t have the incentive to keep writing policies regardless of the price. Most companies wouldn’t be willing to accept revenue declines like Berkshire does.
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A default assumption that all generated earnings will be returned to Berkshire corporate for allocation to their best use. I actually think this is the most important one. Most firms just plow their earnings back into their business in an attempt to keep growing. (This is pretty sensible for managers who are compensated based on firm size.) At Berkshire, the default assumption is different - if you’re a Berkshire sub, you only get to retain your earnings if you can make the case that you’re generating sufficiently high incremental earnings. Otherwise, Buffett (and his successors) get to allocate that cash to what they believe is the best use. I think that, on its own, is an advantage over publicly-traded companies that should translate to a material advantage over the index over time.
Busted - I am not tall.
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Go here and push play on your favorite ticker, story time
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Express suddenly breaking out, which is good, because I took a flyer on a few hundred shares this morning.
Has the forum come to any consensus about whether it is illegal for laypeople to pump up a stock as long as it’s not fraud or based on insider info?
I’m pretty sure the SEC’s answer to that is no, as long as it isn’t fraud/misleading or based on insider info I think it’s OK.
There are entire discords and Twitter groups that pump bullshit low float stocks and nothing has happened (yet). Guys with 100k+ followers that tweet OMG BUY XYZ! and then there’s a massive green candle and it spikes 5 - 10%.
DeepFuckingValue posted, sold 200 calls, holding rest. Just insane
https://www.reddit.com/r/wallstreetbets/comments/l4xje1/gme_yolo_update_jan_25_2021
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I haven’t gone down the rabbit hole, but has anyone questioned whether the posted account screenshots are legitimate?
It’s on reddit, dude. Of course it’s legit.
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He’s posted constant updates and I’m pretty sure been verified by the mods.
But he’s got 4.8 million straight cash, right? Not too bad.
I wonder when he sold those calls. Might have been what sent the stock crashing at 11:00.
Apparently he sold those options at around $130, lol amazing, what a champion.
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Only up 25% on my expr calls? Weak ass bullshit.
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Does selling calls exert a downward pressure on the stock price? Like if he sold all his calls and rolled it all into stock would that basically be neutral, or would it exert a pressure on the price one way or the other?
I always say let he who hasn’t dipped his tender in Cristal cast the first stone.
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This is how I choose to imagine the WSB guy today
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