AN INVESTOR who bought one Berkshire Hathaway share at just over $11 when Warren Buffett took control of the firm 50 years ago, and kept it, would have seen its value hit an all-time peak above $190,000 in recent days, an annual return of 21%. As shareholders count their blessings and head to Omaha, Nebraska, for Berkshire’s annual jamboree on May 3rd, it is only right to pay tribute to Mr Buffett’s outstanding success.Berkshire is into all manner of business, from insurance to ice-cream parlours. Normally, such diverse groups suffer a “conglomerate discount”; but Berkshire’s shares trade at a 40% premium to the book value of its holdings. Mr Buffett’s proven formula has been to seek solid firms with good defences against competitors, leave their managers to run them as before, and hang on to them for the long term. His success over the past half-century makes him living disproof of the “efficient-markets hypothesis”, which argues that even the shrewdest investor cannot, over the long term, buck the collective wisdom of the market and consistently outperform it.It would seem logical to conclude that the last thing Berkshire needs is to change. But Mr Buffett is 83...
from The Economist: Leaders http://ift.tt/1jVeyZX
No comments:
Post a Comment