Jurgis

Sorry, but this is not true. Please read "Snowball". Buffett has fired multiple CEOs because they underperformed. Including 2 CEOs of KO via backroom deals. So CEOs "having and affair or worse" do impact performance of even KO. And KO is not an exception, this has happened with multiple businesses Buffett invested in. I also think that Buffett is deluding himself if he thinks that he knows where IBM will be in 10 years. But that's perhaps different discussion. :)

I'll +1 on oddballstocks post. :)

I agree that apple is not a very good car. I believe Cinderella used a pumpkin with better success. ;D ;D ;D

+1 on Uccmal's post too.

I think Tim's suggestion is good one. Find your personal Charlie if you can. BTW, this is true for a lot of other endeavors: find a friend/colleague who is good to brainstorm/discuss/get feedback from. Someone who matches what you're looking for when discussing things and yet can give a good valid criticism. It's not trivial to find such person. If you find them, they are worth the weight in gold. :) Another note though: investment like writing novels is not physics: there's a lot of subjectivity and thesis that works for one person might not work for someone else. It's easy to destroy any thesis in general or at least imagine outcomes that would destroy the returns. Since humans are not good in guessing/assigning probabilities, these outcomes may or may not really hurt estimated returns. Most discussion even on this board does not go into "Outcome X has Y% chance, outcome Z has W% chance, so your return will be approximately U%". People will rather say "Oil will go down, Google will enter the market, Bank of Japan will devalue the yen and so your investment will lose". I am exaggerating a bit, but ultimately very few discussions go really deep even the ones with 100+ pages of comments. And this is partially understandable, since, as I said, assigning probabilities is very hard if not impossible. That's another part of difficulty.

Depressing topic. ;) Every time I look at any investment I hold or don't hold, I think that I don't know enough. Even more depressing is that I think I won't know enough even if I spent more time on studying that particular company/business/business area/etc. Your quote of Walter Schloss might be right - it's tough to understand a business you invest in without owning a business outright. Buffett/Munger make the same point.

I think your question in unanswerable as posed. Some people can - possibly by accident though. E.g. they could buy FB or Whole Foods and demolish the index. If we are talking about asset-manager compounders, someone might buy FRMO and demolish the index. Or not. :) Most people won't. But most people won't demolish the index whatever they do. I don't think it's easy to say that micro-cap net-net trading or financial stock leap investment will outperform compounder portfolios in general. For some people it might. For some it won't. Personally, I have underperformed indexes last 3 years, so my current strategy is to get into compounders and let smart people (Watsa, Malone, etc.) manage my money. I hold FFH, Malone, FRMO, some ideas from this board: GDWN.L, TESB.BE. I also have oil co chunk of portfolio. So it's definitely not a pure experiment you are asking about. And even if I outperform, this won't provide you any actionable insights I think. Aside: Should I switch to index funds instead? Possibly. :) But hope springs eternal and all that. 8)

I don't understand your question. There is a survivorship bias of course, but BRK, FFH, Malone, MSFT for most of its history, KO for a very long parts of its history, WMT, COST for long parts outperformed S&P. So had AAPL, GOOGL, MA, V. Can you rephrase what you are asking about?

Hey guys, do you know that Charlie sold most of his Posco holding? just kidding... move along, nothing to see here.

Good post KinAlberta. +1

Nobody said that Berkshire is going to grow 20% or 15% going forward. The reference was to early Buffett/Munger years when they did trade more and generated 15-20% returns.

OK, I like Tim Cook. But this is facepalm worthy. "made up law"? WTH? This is stupid. Of course there are limits to which companies can grow. You cannot have more than 100% of market share. And even assuming you create new products, there's still a limit. Thinking that there isn't is pure stupidity.

And pray tell us what these new skills and talents might be?

Yes. But very few people generate 5% annual alpha spread by acting vs sitting. Are you one of them? ;)

This might be off topic in this thread, but compounders are also boring to tears. Especially for active investors such as people frequenting this forum. There is no action - you just buy and hold. And hold. And hold. That's why very few people ever held BRK or FFH (or for that matter MSFT, GOOGL, WMT, JNJ, IBM ) for 20+ years. And most of the people who did that are not "investors", but rather employees or in case of BRK old ladies from Omaha. ;) Even most self admitted Berkheads or Fairheads on this forum have traded in/out of BRK/FFH more times than they casually admit. Or at least kept a non-trivial amount of their portfolio in companies that were sold much more often than compounding would call for. ;) Unfortunately action is a drug. A very difficult drug to kick for active investor.

Montier is not academic. He's in investment management. Regarding his paper, I think it has some good thoughts. But parts of it are crap. I agree with him that CEOs and top management in USA are way overpaid. I vote against in most proxy advisory votes (FFH and BRK are two exceptions. There are more but not many more). I think he is partially right about short-term incentives for a lot of CEOs. This is not very good. However, without SVM, the companies may be deadweight dinosaurs that just exist to exist and do not provide good capital returns to shareholders. There's a number of Euro and Japanese companies that are run like that. I am not sure if Montier would be happy to work for any of them or invest into them. I think a bunch of people also agree that stock buybacks above intrinsic value destroy wealth for shareholders while creating rewards for management. I doubt this is SVM though. ;) It is possible that public companies are underinvesting. However, this is capitalism. If public companies are underinvesting, then private (or other public companies) can snatch their marketshare by overinvesting. I doubt that everyone in USA just made a cartel and decided not to invest and keep margins high. There is some rationality in not overinvesting and not plunging into price wars. It actually shows management rationality that they don't do it unless they see an edge. The drop of labor wealth is mostly due to globalization. SVM is likely not a big contributor. Like Munger says, people complaining about drop of labor wealth are complaining about millions of Chinese climbing out of poverty. Would USA be in a better position if it was protectionist and did not allow cheaper labor in China/India to contribute?

I'm trying to decide if I should buy another 2 shares of Fairfax or to spend money for a trip to DJCO annual. ::)

I haven't done enough due diligence to say something more precise. It was just impression I got from the recent history. It might be wrong.

Hah, a lot of Bostonians. :) I live in suburbs. :) I run a very small (2.5 persons right now) gathering discussing companies, books, value investing strategies, etc. Our next meeting is February 15th, 1pm at my place. We are discussing Fairfax this time... ;D ;D My friends are not insurance/financial company analysis experts, so we never got to talk about FFH... until now. I'm not expecting to cover anything revolutionary, mostly the basics. If interested to come, shoot me a private message and I'll give you details. :) Sorry, this is on short notice and date/time is set. I'll see if we can do something else that fits more people and in more central location later this month or next month. Unfortunately, it's hard for me to get to Boston center on weeknights... I've done meetings at MIT, 5pm on Mondays in the past. Is this something that might work for people? What are date/time/location preferences overall?

Very nice post Liberty. :)

I told you that I see binary outcome. :) And I think it's about 50-50% which way things go. So, no, I am not optimistic. I just believe that we won't muddle through. Either we get the whole cheese, or we crash and burn. Regarding your examples: asteroid - predictable, possible to handle tsunami - predictable soon, affects tiny parts of population (even if California is hit) a massive earthquake - see tsunami a new disease - possible, but unlikely to destroy civilization. Horror movies are mostly fiction. (Yes, grey goo is a risk) a major war - yes, possible. Civ destruction is possible. the deadly repercussions of global warming - possible to handle after effects of the collapse of our financial system - not sure what you exactly mean, but I'll go with "collapse of financial system due to massive automation, massive human unemployment due to robots". Yes, possible. Likely to lead to war. See war above.

Hi guys, Anyone in Boston area interested to get together? Post here and I'll see what we can do based on interest. :D

How big was the meeting last year? Do they require shareholder certs to get in? (I assume it's too late to buy 1 share ;)).

I for one would welcome our new AI overlords. 8) Seriously, if it came to humans vs. self-conscious AI, I'm not sure which side I would take. Humans have a lot of unadmirable qualities. 8) The best case - and perhaps likely - IMHO is the merging of humans and machines. But, yeah, there are lot of things to work out. :)

Bill Gates on immortality research: http://www.standardmedia.co.ke/business/article/2000149742/bill-gates-it-is-selfish-for-rich-people-to-try-to-live-forever I doubt this will stop people from researching it though.