Excellent article. Thanks Percy.
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Good post and very interesting you say this now as the CNBC interview alludes to what you have highlighted but in the context of the fully owned companies. Buffett and Greg Able both said that Greg is much more forceful than Warren and will tolerate less deviation from perfection.
What you have highlighted is true in the public equities and more so in the private.
My comment regarding difficult to beat is in part due to the fact that Berkshire has grown EPS at a far higher rate than the market over the last 10 years and is valued much lower currently. 2 very powerful forces. They have a virtually unlimited runway to reinvest all earnings at 10% + and augment that with free float as well as incredibly low rate debt such as the Japan issues.
Great article percy,
I'll add to it with this;
https://open.substack.com/pub/auckla...m_medium=email
His numbers are off, maintenance WAY higher and S&P500 returns 10% not 8% so his argument is dramatically understated.
Everyone thinks property makes them rich but the truth is the very opposite.
It's what will stop them from ever being rich.
S&P real rate of return is 6.7 per cent. From J Siegel, Stocks for the Long Run, the most recent edition. So that's 6.7 per cent after inflation. Add inflation and one gets the 10 per cent or close enough.
I see what you mean. Berkshire is well positioned. They seem to have plenty of cash to invest at any time, purely because it just generates cash. I am not familiar with Abel I have to admit. He seems very successful in his own right and he has been part of the Berkshire ecosystem. I do get the feeling Buffett has always been stern in decision making, but never liked confrontation. So this direct approach from Abel is an interesting contrast. Knowing Buffett he would have done a thorough job sussing him out for the role.
Its interesting they are buying into Japan banks. It reminds me of the the Chandlers brothers from Hamilton. At one time they bought into a Japan Bank. They ran a very concentrated portfolio and achieved a excellent investment record. I don't think too many people in this country know about them. But they are right up with the great investors. I think 30% plus p.a over 20 years.
6.7% over the long run of US markets might be right but for most people that is not the case. most people investing horizon is a limited amount of time therefore returns depend on when you start and when you end and how index's perform within that time period
as the article i posted on this thread mths ago proved for most people 6.7% is not reality
Interesting articles and discussion.
So, sell all rental properties and buy BRK-B?
Also, those examples account for the inherit leverage in property correct? It seemed like they did from the wording.