Warren Buffet's latest letter to shareholders -- why he succeeded

[Darren Dirt]

...in his latest letter to shareholders released this past weekend, in effect a guide to why he has been able to build such a vast corporate empire and a $72 billion personal net worth. It lays out two theories of why Berkshire has been so successful. But those two theories have radically different implications for how the company will fare after the 84-year-old Buffett?s retirement or death.

Mr. Buffett has bought enough seemingly random companies over the years that the combined entity defies any simple description (In short: A giant insurance company plus a giant railroad plus a giant electric utility plus a giant stock portfolio along with various and sundry investments, including in private jet travel, mobile homes, men's and women?s underwear, and dairy-based desserts. Oh, and half of Heinz ketchup).

Finance theory would say that there is no real reason for all those unrelated businesses to be underneath the same corporate umbrella.

To sum up...

Theory #1: something about moving around capital/assets (finance talk makes my brain hurt right now -- "At Berkshire, we can -- without incurring taxes or much in the way of other costs -- move huge sums from businesses that have limited opportunities for incremental investment to other sectors with greater promise. Moreover, we are free of historical biases created by lifelong association with a given industry and are not subject to pressures from colleagues having a vested interest in maintaining the status quo.")

Theory #2: popularity contest winner; after all these years companies are looking to sell to BH over most any other firm. Self-fulfilling prophetic growth. ("In effect, he is able to get favorable deals on his acquisition because of a reputation built over a lifetime for buying good companies and more or less leaving them alone.")


:sigh: Sounds like too much work (and perhaps "too late in the game"), so I guess I gotta be accepting of the idea of having a personal net worth of far less than $72 billion

[Thorin]

If you want a net worth of $72 billion, just convert all your cash to Zimbabwean Dollars.  I would suggest doing it in the third Zimbabwean Dollar, that way it'll cost you only 7 pennies.

[Tom]

If you want a net worth of $72 billion, just convert all your cash to Zimbabwean Dollars.  I would suggest doing it in the third Zimbabwean Dollar, that way it'll cost you only 7 pennies.

Why in the hell would you print so much more money to cause that kind of inflation?? It hit over 50,000,000 PERCENT. Talk about dumb.

[Thorin]

Yeah. Sucks to be anyone getting paid in Zimbabwean dollars while they were doing that. Some civil servants would get their paycheque and immediately leave work to turn it into foreign currency. If you waited until after work, the monthly paycheque would be worth less than a load of bread.

There are "economists" in the US that are calling for the government to print more money instead of borrowing it from banks.

[Tom]

Unfortunately borrowing from banks amounts to about the same thing. It's all pretend play money that they can create out of thin air whenever they want.

[Darren Dirt]

If you want a net worth of $72 billion, just convert all your cash to Zimbabwean Dollars.  I would suggest doing it in the third Zimbabwean Dollar, that way it'll cost you only 7 pennies.

YOU WIN!

Spoiler

...in the "fastest derail of a thread ever" contest.

Spoiler

2015 Edition, anyway

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