As is often the case, I was going to write something else today.
(It’s an article I’ve been working on: If you want my tips on choosing the best Super fund, stay tuned. It’s almost finished and will be published in the next couple of days!)
But, well, the news fairy intervened, in the form of a Midwest United States nonagenarian named Warren.
Warren Buffett, actually. You might have heard of him.
I am an unabashed Buffett fan. I own shares in his company, Berkshire Hathaway.
I’ve been recommending shares in the company to my members and readers for yonks!
In an age of bloated-ego tech bros (you know who I mean), reality TV ‘stars’ and crypto ‘finfluencers’ on social media, an unassuming old bloke living in the same house for half a century doesn’t exactly arouse much interest.
Unless, that is, he’s the most successful investor the world has ever seen.
Buffett is, unquestionably, the GOAT.
Yeah, that gets some attention.
But still not enough.
You see, Buffett himself and Berkshire the company lack the one thing that most guarantees interest and attention these days… excitement.
At least that’s how many people see it.
I’ll tell you why they’re wrong, in a minute. But first I’ll tell you why they’re right.
See, Buffett epitomises yawn-inducing, nodding-off, is-this-thing-still-on, responses from most people.
He’s not flashy.
He doesn’t buy or sell that often.
The businesses his company owns are – hold onto your seats, folks, – in things like insurance, energy generation, railroads, aerospace supplies and manufactured homes.
He’s owned most of them for years.
Not exactly ground-breaking huh? Not going to displace AI / Lithium / Crypto from either the newspaper headlines or the clicks of bored readers, is it?
Which, given our evolutionarily-unprepared brains, isn’t a surprise. We’re made for noticing – and taking – action.
But here’s why they’re wrong:
Buffett, who’s studiously made a career of learning how to suppress those very human urges, has made a huge fortune for himself and his investors.
Which – when you think about it – is a nice parallel for investing in general, right?
Also, not surprisingly, exactly what Aesop tried to teach us about the tortoise and the hare.
Turns out… as humans, we’re not very good at listening and learning.
But I digress.
While many people were distracted with new, shiny, temporary and often, well, worthless, Uncle Warren has just been doing his thing.
And?
And Berkshire Hathaway’s share price hit a new all-time high, overnight.
It got reported this morning, in a few places, but almost no-one was talking about Berkshire Hathaway before that.
And the news will die down again.
We’ll turn our attention to short-term economic issues, the latest hot stocks and cool tech, and the cycle will repeat.
How do I know?
Because it’s been happening for years.
In the 90s, people thought Buffett was past it.
In 2007 people thought Buffett was old hat.
Berkshire shares fell 25% in early 2022.
And so it goes.
Buffett, meanwhile, just keeps doing his thing: buying quality businesses and shares, and letting time do the work.
Boring huh?
I guess you want to know the share price?
How does $836,000 strike you?
Yes, seriously. US$551,000. Each.
Now, thankfully, we can buy fractional shares – the ‘B Class’ shares that Buffett created in decades past. They’re US$362 each.
Most people won’t.
Most people don’t.
They’re too busy getting caught up in the excitement of the here and now.
Yes, while Berkshire shares hit those new highs.
That’s the true price of overstimulation – the missed opportunity to invest in a boringly wonderful compounding machine.
Of course, I should finish with the usual objections: isn’t Berkshire too big now? Isn’t Buffett likely to leave Berkshire at some point soon? They asked both questions, over and over, during the last 20 years, too.
So let’s answer them:
It’s true that the bigger Berkshire gets, the harder it is for the company to reinvest all of the cash it gets from its subsidiaries. And with a smaller opportunity set, future returns will probably be lower than the past. I can deal with ‘less than spectacular’, personally.
And, while I choose to believe Buffett is immortal, I can’t back that up. He’ll leave Berkshire, one way or the other, at some point. But he’ll leave some wonderful operating businesses that already operate independently, and some investment managers who have long been successful in their own right, and who invest the way Warren does.
No investment is risk-free. None have zero downsides. But I’ve owned Berkshire for years, have added sporadically, and don’t imagine I’ll be selling any time soon.
Don’t make investing more complicated than it needs to be. There are no extra points for ‘degree of difficulty’.
Or, more pithily, Keep it Simple, Scott.
As the old Mortein ad said, when you’re onto a good thing, stick to it!
Good advice for investors, too, I reckon. Thanks Louie!
Fool on!
